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.
Published on April 29, 2026