Jan. 25 (Bloomberg) -- State Street Corp. led declines among asset managers as the Federal Reserve pledged to keep its benchmark interest rate low until at least late 2014, eroding profits for custody banks and money-fund firms.
State Street, based in Boston, fell 3.4 percent, the biggest decline in a week and the most in the 20-member Standard & Poor’s index of asset managers and custody banks, which dropped 0.9 percent.
Economic conditions are likely to warrant “exceptionally low levels for the federal funds rate at least through late 2014,” the Federal Open Market Committee said today. The policy may hurt lenders’ profits as they struggle to find loans or securities with yields high enough to support their net interest margins, a gauge of profitability that measures the difference between the cost of funds and what they earn on assets.
--Editors: Josh Friedman, Sree Vidya Bhaktavatsalam
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