The Federal Reserve held rates steady for a fifth straight meeting Wednesday but faced rare dissents from two officials seeking an immediate cut. The decision followed a period of intense political pressure on Fed Chair Jerome Powell by the White House to lower interest rates. Data released Wednesday showed the U.S. economy is growing again, helped by trade swings and American consumers who keep spending. But there are also signs of caution. And official government inflation reports in recent months have involved more guesswork than previously known.

Setting interest rates is sometimes more art than science, especially when the economy keeps defying predictions—a reality the Federal Reserve confronted head-on Wednesday.

There are two economic worlds the U.S. could be living in right now, and Fed officials might not know which one for months. In one, economic weakness that’s been lurking beneath reasonably solid headline numbers finally surfaces. In the other, artificial intelligence investment and buoyant household wealth power the economy past trade-war headwinds.

The Fed held rates steady this week, and Fed Chair Jerome Powell kept his options wide open for its next gathering in September, promising little while ruling out nothing.

Officials are betting they can afford to wait at least two months for clarity on whether tariffs will slow economic activity, fuel inflation, or pass by with little effect. That patience comes with risks—on both sides.

• Fed Holds Rates Steady, but Two Officials Back a Cut
• Transcript: Fed Chief Jerome Powell’s Postmeeting Press Conference

• Bank of Japan Gov. Kazuo Ueda said Thursday that the likelihood of the bank's economic outlook becoming realized has increased somewhat as concerns over trade policies eased. "Uncertainty regarding tariffs has diminished to some extent, as a result of the U.S.-Japan trade agreement and the conclusion of negotiations between the U.S. and other nations," Ueda said at a news conference. (Dow Jones Newswires)

The Commerce Department said U.S. gross domestic product—the value of all goods and services produced across the economy—rose at a seasonally and inflation adjusted 3% annual rate in the second quarter. That is up from a 0.5% contraction in the first quarter.

7:30 a.m.: Challenger Job-Cut Report
8:30 a.m.: Personal Income and Outlays
8:30 a.m.: Employment Cost Index
8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims
9:45 a.m.: Chicago Business Barometer - ISM-Chicago Business Survey - Chicago PMI
2 p.m.: U.S. Securities and Exchange Commission Closed Meeting
3 p.m.: Agricultural Prices
4:30 p.m.: Federal Discount Window Borrowings
4:30 p.m.: Foreign Central Bank Holdings

8:30 a.m.: U.S. Employment Report
9:45 a.m.: US Manufacturing PMI
10 a.m.: University of Michigan Survey of Consumers - final
10 a.m.: ISM Report On Business Manufacturing PMI
10 a.m.: Construction Spending - Construction Put in Place
11 a.m.: Global Manufacturing PMI
4 p.m.: Domestic Auto Industry Sales
7 p.m.: U.S. pause on 'reciprocal' tariffs ends

The Federal Reserve left policy rates on hold at 4.25%-4.50%, as expected, but signalled a "clear policy easing bias" by stressing downside risks to growth and the labor market, says BlackRock Investment Institute's head Jean Boivin in a note. "This is also reinforced by two Fed governors dissenting against the decision--the first time that has happened since 1993--to favor a rate cut." The Fed also made clear that it assumes the inflationary impact of tariffs will be temporary, Boivin says. However, the Fed's failure to commit to a September rate cut questions the five rate reductions which money markets are pricing in through end-2026, he says.  — Emese Bartha

Bank of Canada Governor Tiff Macklem reiterates a few times during his post-decision press conference that central bank officials stand ready to support the economy if needed, but won't allow "a tariff problem to become an inflation problem." The central bank left its policy rate unchanged at 2.75%, and Macklem says the BOC is ready to respond to new information. "The economy is weaker but it's not sharply weaker," he says. The new wrinkle in the BOC's rate-policy decision is a readiness to cut rates again should economic conditions weaken further while inflationary pressures remain in check. — Paul Vieira

• The number of homes going under contract in the U.S. unexpectedly declined in June, as high prices and mortgage rates persist, according to the National Association of Realtors’ report.
• Canadian Prime Minister Mark Carney said bilateral talks with Washington to resolve the tariff row might not lead to a deal before the Aug. 1 deadline.
• U.S. copper futures plunged roughly 20% in late trading Wednesday after President Trump unveiled 50% tariffs on copper products but not on the raw material itself.
• The Trump administration escalated its pressure campaign against Brazil on Wednesday, announcing sanctions against a judge overseeing criminal proceedings against former leader Jair Bolsonaro and raising tariffs on the country to 50%.
• Unemployment remained at historic lows in the eurozone at the end of the second quarter, adding to signs of economic resilience and cementing the likelihood that the European Central Bank will keep holding interest rates in place.
• Inflation stayed steady in France, likely keeping the European Central Bank cautious over any further cuts to interest rates ahead.
• China’s official gauges of factory, services and construction activity weakened in July, signaling a potential economic slowdown after resilient growth in the first half of the year.
• In Indonesia and elsewhere, export manufacturing helped narrow the wealth gap with the West, creating a consumer class, but that transformation has stalled

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by news associate Roshan Fernandez in New York. Send your tips, suggestions and feedback to roshan.fernandez@wsj.com.