The US Federal Reserve is anticipated to keep interest rates steady during its upcoming policy meeting scheduled for Wednesday, amid rising inflation risks stemming from geopolitical tensions and a slowing economic growth outlook, according to an analysis by ICICI Bank.
The report indicates that the Federal Open Market Committee (FOMC) is likely to maintain its current rate levels at the conclusion of its meeting set for April 28-29. However, Governor Stephen Miran is expected to dissent, advocating for a 25 basis points cut.
“The case for the FOMC to maintain the status quo and signal an extended pause has significantly strengthened,” the report stated. It emphasized that the ongoing conflict is expected to act as an inflationary shock for the US economy, compelling the central bank to express concerns over rising prices while adhering to a data-driven strategy.
Growth projections for the US economy have been adjusted downward, with GDP growth now forecasted at 2 percent for 2026, reduced from 2.2 percent, and 1.9 percent for 2027, slightly below the previous estimate of 2.0 percent. The report also highlighted potential downside risks to these projections.
The analysis noted that tensions in the Middle East are likely to present dual challenges for the US economy, including upward pressures on inflation and downward risks for the labor market. “The US central bank will likely want to take time to evaluate the conflict’s impact on the economy before making any decisions,” the report observed.
Recent data indicating stabilization in the labor market and inflation pressures driven by high energy prices support maintaining current rates, the report concluded. It also noted that the US economy appears less shielded from the energy crisis compared to regions like Europe and Asia, excluding China. Nonetheless, it asserted that risks of stagflation seem less pronounced in the US than in other major economies.
The Federal Open Market Committee will reveal its policy decision at 2:00 PM ET (11:30 PM IST) on April 29, followed by a press conference with Federal Reserve Chair Jerome Powell at 2:30 PM ET.
Published on April 29, 2026.
