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US Fed Likely to Hold Rates Steady Amid Inflation Risks from Conflict

The US Federal Reserve is expected to keep interest rates unchanged at its April 28-29 policy meeting. Rising inflation risks from geopolitical tensions and a slowing growth outlook complicate the policy environment. The report highlights that the Middle East conflict may create upside risks to inflation and downside risks to the labour market. GDP growth forecasts have been revised downward to 2% for 2026 and 1.9% for 2027.

Key Points: US Fed to Hold Rates Steady Amid Inflation Risks

  • US Fed likely to hold rates steady at April 28-29 meeting
  • Governor Stephen Miran expected to dissent, vote for 25 bps cut
  • Conflict in Middle East creates dual risks of inflation and labour market weakness
  • GDP growth forecasts revised down to 2% for 2026, 1.9% for 2027
2 min read

US Fed likely to hold rates steady, amid inflation risks from conflict, in policy announcement today: Report

US Fed expected to keep rates unchanged at April 28-29 meeting as inflation risks from Middle East conflict and slowing growth complicate policy.

"The case for the FOMC to maintain status quo and signal that it is likely going to be on a prolonged pause has increased considerably - ICICI Bank report"

New Delhi, April 29

The US Federal Reserve is expected to keep interest rates unchanged at its upcoming policy meeting on Wednesday, as rising inflation risks from geopolitical tensions and a slowing growth outlook complicate the policy environment, according to a report by ICICI Bank.

The report said that at the conclusion of its policy meeting scheduled for April 28-29, the Federal Open Market Committee (FOMC) is likely to maintain a status quo on rates, although Governor Stephen Miran is expected to dissent and vote for a 25 basis points cut.

It stated, "The case for the FOMC to maintain status quo and signal that it is likely going to be on a prolonged pause has increased considerably".

It noted that the ongoing conflict is expected to act as an inflation shock for the US economy, which may lead the central bank to highlight concerns on rising prices while continuing to follow a data-dependent approach.

According to the report, growth projections for the US economy have been revised downward. GDP growth is now expected at 2 per cent for 2026, down from 2.2 per cent, and 1.9 per cent for 2027, slightly lower than the earlier estimate of 2.0 per cent. The report also flagged downside risks to these projections.

The report said that the conflict in the Middle East is likely to create dual risks for the US economy, upside risks to inflation and downside risks to the labour market.

"The US central bank will want to give itself some time to assess the impact of the conflict on the economy before it responds," the report noted.

Recent data showing stabilisation in the labour market and inflation overshooting due to elevated energy prices further support the case for maintaining current rates, it added.

The report also pointed out that the US economy appears somewhat less insulated from the energy crisis compared to regions such as Europe and Asia, excluding China. However, it said that stagflation-like risks are less pronounced in the US compared to other major economies.

The Federal Open Market Committee is scheduled to announce its policy decision at 2:00 PM ET (11:30 PM IST) on April 29, followed by a press conference by Federal Reserve Chair Jerome Powell at 2:30 PM ET.

- ANI

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Reader Comments

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Priya S
Honestly, the Fed is between a rock and a hard place. Conflict in the Middle East is driving up oil prices, which affects us directly. Every time petrol prices rise here, we feel it in our wallets. Hope the RBI plans accordingly.
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Vikram M
Interesting that the report says the US is less insulated from the energy crisis than Europe. Seems ironic given how much we depend on oil imports. But at least the Fed isn't rushing into cuts—better to be cautious than repeat the mistakes of the 1970s.
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Michael C
As someone who works in finance, this "data-dependent" approach from the Fed is frustrating. They keep delaying action while inflation risks build up. A 25 bps cut might have been too aggressive, but at least signal a path forward. The conflict is a real wild card.
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Sarah B
I'm just glad the US is being cautious. We've seen how rate hikes in the US affect emerging markets like India—capital outflows, rupee depreciation. A steady Fed is better for our stability, even if it means higher borrowing costs for longer. Achha hai! 👌
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David E
Respectfully, I think the Fed is overthinking this. The labor market is stabilizing, yes, but if they keep rates high for too long, they risk tipping the economy into recession. The conflict is a valid concern, but cutting rates might stimulate growth and help offset the energy shock.

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