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The biggest news last week was Wednesday’s Fed policy meeting. As was universally expected, the Fed held interest rates unchanged at 5.25%. Investors, hoping to find out the influence of recent turmoil in the stock market and the subprime mortgage sector, were somewhat surprised that the accompanying statement made no explicit mention of these issues. When all the dust settled, mortgage rates ended the week unchanged from the prior week, and they have barely moved at all in March.

The most notable change in the Fed’s statement was the removal of its bias to raise rates, which leaves the Fed with more flexibility to lower rates in the future without surprising investors. The overall message from the Fed was that its policy will continue to be determined by future economic data. The Fed continued to emphasize that inflation was its primary concern, and its outlook on economic growth was less optimistic than at the prior meeting in January. As a result, investors modestly raised their expectations for a rate cut during the first half of the year.

Aside from the Fed meeting, two major reports from the housing sector were released last week, and the results were mixed. February Housing Starts came in higher than expected, following a sizable decline in January, typical of the volatility seen during the winter months. In contrast to the strong Housing Starts number, February Building Permits fell short of the forecasts, leaving the report roughly neutral for the housing market. Friday’s February Existing Home Sales data showed an unexpected surge in sales, although the good news was offset somewhat by an increase in inventories and a small decline in median prices. In short, the housing market appeared to be holding steady.

Steady is a good thing these days. Now leave work early and go outside and enjoy this great spring weather.