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... "In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data," the rate-setting Federal Open Market Committee said in a policy statement that was tweaked to add language that in the past has been used to signal a pause in policy actions -- an outlook at odds with market expectations still leaning toward two rate cuts in 2026.

Policymakers' refreshed estimates -- hindered by incomplete data about the economy after a six-week government shutdown - also showed they expect inflation to slow to around 2.4% by the end of next year even as economic growth accelerates to an above-trend 2.3% and the unemployment rate remains at a moderate 4.4%, an outlook that should dispel worries about potential stagflation that have persisted this year.

The wide disagreement on the appropriate policy for such an environment also showed how challenging it could be to build a consensus in a policymaking body about to experience a leadership change, with Trump expected to nominate a successor to Fed Chair Jerome Powell within the next few weeks. ...