* Federal Reserve gives statement Wednesday
* Putin comments reduce East-West tension
* Consumer Price Index up 0.1 pct in Feb.
By Sam Forgione
NEW YORK, March 18 (Reuters) - U.S. Treasuries yields were mostly flat on Tuesday ahead of the Federal Reserve’s two-day policy meeting and after comments from Russian President Vladimir Putin eased tensions surrounding Ukraine.
The Fed is expected to continue to reduce the size of its monthly bond purchase program, but also alter its forward guidance when it gives its statement on Wednesday after its meeting.
“Everybody’s waiting with bated breath to see what the Fed comes back with,” said Aaron Kohli, interest rate strategist at BNP Paribas in New York. He said the anticipation kept Treasuries prices mostly flat.
The Fed previously said that it would not raise interest rates until joblessness fell to at least 6.5 percent, a pledge that policymakers thought would hold until at least mid-2015. But that rate hit a five-year low of 6.6 percent in January, before rising to 6.7 percent in February.
Meanwhile, Russian President Putin, while approving plans to make Crimea part of Russia, said his country did not want Ukraine to split further, reducing fears of an escalation in East-West tensions.
Moscow’s seizure of Crimea, denounced by the West as illegal and in breach of Ukraine’s constitutions, has caused the most serious East-West crisis since the end of the Cold War.
“Putin’s remarks just before 8:00 EDT were taken as Crimea-centric with less belligerence toward the balance of Ukraine,” said Jim Vogel, an interest rate strategist at FTN Financial in Memphis, in a research note.
U.S. economic data on inflation in February, meanwhile, largely met expectations, while weaker-than-expected housing starts last month had a muted impact on Treasuries prices.
The Labor Department said on Tuesday its Consumer Price Index nudged up 0.1 percent in February, in line with economists’ expectations, as a decline in gasoline prices offset an increase in the cost of food.
The Commerce Department, meanwhile, said U.S. housing starts slipped 0.2 percent in February, marking the third straight monthly decline, while a rebound in building permits offered some hope for the housing market.
“The momentum that (the data) would normally impart to rates is absent,” BNP Paribas’ Kohli said. He noted that the negative impact of frigid temperatures on U.S. economic data late last year and at the start of this year was waning.
The 10-year U.S. Treasury note was last up 2/32 price to yield 2.69 percent, roughly unchanged from late Monday, when the yield was at 2.70 percent. Bond yields move inversely to their prices.
The 30-year U.S. Treasury bond was last down 1/32 in price to yield 3.63 percent, also roughly unchanged from late Monday.