Federal Reserve Lowered Rates and Retained Inflation and Unemployment Outlook

Barry Adams
17 Sep, 2025
New York City

Wall Street indexes flatlined on Wednesday ahead of the widely anticipated monetary policy decision. 

The S&P 500 index decreased 0.1%, and the tech-focused Nasdaq Composite fell 0.3% as investors reviewed the Federal Reserve's rate decisions and economic projections. 

The Federal Reserve, as widely anticipated, lowered the fed funds rate range by 25 basis points to between 4.0% and 4.25%, amid deteriorating labor market conditions. 

The central bank lowered rates for the first time this year and signaled additional rate cuts later in the year. 

The central bank revised its 2025 GDP growth estimate to 1.6% from 1.4% but held its jobless rate estimate at 4.5%, PCE inflation at 3.0%, and core PCE rate at 3.1% compared to its previous estimate released in June. 

Meanwhile, consumer price inflation remains a worry for the policymakers as the sharp escalation in import taxes filters through the economy and wipes out hundreds and thousands of small businesses across the nation.

Moreover, farmers are struggling to find buyers for soybeans, wheat, and corn; China imports about half of these key crops that are heavily subsidized by the U.S. federal government. 

China has been trimming its imports of U.S. agricultural products, and the world's second-largest economy has been sourcing increasing amounts from Brazil and Argentina since the start of the Trump administration's global tariff war.

 

Housing Starts and Building Permits Highlight Weakening Activities

The latest housing market data pointed to a mixed picture as builders struggle with challenging labor market conditions and rising costs of imported materials following the Trump administration's erratic trade policy.

August's housing completions advanced 8.4%, building permits dropped 11.1%, and housing starts decreased 6% from a year ago, respectively. 

Seasonally adjusted building permits were at an annual rate of 1.31 million, 3.7% lower than the revised 1.36 million annual rate in July, according to the U.S. Census Bureau.

Housing starts in August were at an annual rate of 1.31 million, 8.5% lower than the revised annual rate of 1.43 million in July. 

However, the housing completions rose 8.4% to a 1.61 million annual rate from the revised July estimate of 1.48 million.

 

U.S. Stock Movers 

Alibaba Group Holding jumped 2.6% to $166.35, and the China-based e-commerce platform operator said China Unicom has agreed to use its AI chips. 

Nvidia Corp. decreased 0.7% to $173.25 after a report claimed that China has banned its largest industrial and electronics companies from using the company's AI chips.

The U.K.-based Financial Times first reported China's ban, which could not be verified by our independent sources in Shenzhen and Beijing.