Fed FOMC April 2026: Steady Rates, Powell Exit Focus

Why this week’s Fed meeting matters

The Federal Reserve’s April meeting comes at a sensitive moment for markets, with investors balancing a steadier domestic inflation picture against a fresh energy shock linked to the Iran war. Economists and traders broadly expect the Fed to keep interest rates unchanged, but attention is likely to center on Chair Jerome Powell’s press conference and how the Fed frames risks to inflation and growth. The meeting is scheduled for April 28-29, with the policy decision expected on April 29 ET.

This is also an unusual meeting from a communications standpoint. Observers note the meeting does not include updated dot plot projections, leaving Powell’s remarks as the main source of incremental guidance. Against that backdrop, any shift in the tone around inflation, energy prices, or the labor market could move rate expectations even if the decision itself remains unchanged.

Rates expected to stay at 3.50%-3.75%

Market consensus is for a hold. Analysts expect the Fed to keep its rate target unchanged at its current range of 3.50%-3.75%. CME FedWatch data cited in the material shows a 100% probability that rates will remain unchanged at the April meeting.

Some strategists argue the policy announcement could be low-drama on the surface. Lawrence Gillum, chief fixed income strategist for LPL Financial, described the meeting as likely to be “pretty boring” in terms of interest-rate changes or changes to the Fed’s balance sheet. Even so, investors are preparing for headline risk because of geopolitics and the potential for shifting expectations around the timing of any future easing.

Oil shock and the inflation debate: “hot headline, cool core”

The key macro question is whether the spike in oil prices caused by the Iran war will feed into broader inflation. Christian Scherrmann, chief US economist at DWS, said inflation tied to the conflict has begun to show up in the data. In March, headline CPI rose to 3.3% year-on-year, described as a jump of nearly one percentage point from the prior year-on-year rate.

At the same time, the material notes that core inflation has not yet shown meaningful pass-through from higher energy costs, and long-term inflation expectations remain stable. That split between headline and core inflation has encouraged a wait-and-see stance among officials since the March meeting.

Chicago Fed President Austan Goolsbee, a voting member of the FOMC, warned on April 7 about a worst-case mix of oil-driven inflation pressure and persistent tariff effects that could damage consumer confidence and raise stagflationary recession risks. The cited commentary underscores why markets are focused on Powell’s messaging even if rates remain on hold.

How rate-cut expectations have shifted in 2026

Expectations for easing have tightened significantly compared with the start of the year. Gillum highlighted that the market’s view has moved from expecting more cuts after the Fed reduced its target on Dec. 10, to pricing in no cuts until the middle of next year. The material also states that traders no longer expect rate cuts in 2026.

Other market measures cited point to a similarly cautious pricing backdrop. LSEG data is described as implying less than one standard 25-basis-point cut by December, compared with expectations for at least two cuts before the U.S.-Iran conflict. The FedWatch tool is also cited as showing a nearly 70% probability that rates will remain unchanged through the end of the year.

Wall Street forecasts diverge on the next move

While the near-term decision looks settled, forecasts for the months ahead vary widely. A Reuters survey conducted April 17-21 of 103 economists found 71 expect at least one rate cut this year, with a median forecast of a single cut. Nearly one-third, however, expect the Fed to keep rates unchanged for the entire year, a share that has nearly doubled since the prior survey.

Firm-level outlooks differ even more. Michael Feroli, chief US economist at J.P. Morgan, expects the Fed to hold interest rates steady for the rest of 2026, then raise its target range by 0.25 percentage point in the third quarter of 2027. By contrast, Bank of America is cited as still expecting two cuts this year. One view mentioned in the material expects cuts in June and September, but also acknowledges that this is an outlier.

Powell’s chairmanship and the Kevin Warsh transition watch

Several parts of the material point to heightened scrutiny of leadership dynamics. This meeting is described as possibly Jerome Powell’s final meeting and press conference as Fed chair, with markets watching for any signaling that could shape expectations ahead of a transition.

Kevin Warsh, a former Fed governor and President Trump’s nominee to succeed Powell, had a Senate Banking Committee confirmation hearing on April 21. Markets are described as widely expecting the committee vote on Warsh on the evening of April 29 (Beijing time), and if confirmed, he would succeed Powell in May. During the hearing, Warsh said he made no rate-cut promises to Trump.

Warsh’s testimony is also described as indicating attention to trimmed-mean inflation and support for a dual track of “quantitative tightening and rate cuts,” with the material characterizing his rhetoric as showing a dovish tilt even without explicit commitments.

What to watch in the statement and press conference

With rates expected to be unchanged, the most important signals may come from how Powell frames uncertainty around energy prices and how quickly those pressures could move from headline inflation into core measures. The March FOMC statement is cited as explicitly referencing uncertainty tied to the Middle East situation and its impact on the U.S. economy.

Market participants are also watching how Powell balances patience with credibility on inflation. The material emphasizes that, in the absence of updated projections at this meeting, the press conference wording becomes the principal “new” information for traders.

Key facts at a glance

Market impact: rates, bonds, and risk pricing

The immediate market impact described is concentrated in expectations rather than the April decision itself. Futures pricing is cited as implying a near-zero chance of a cut at this meeting, and one section notes less than a 3% chance of a rate cut being priced by fed funds futures. The broader theme is a repricing away from near-term easing, with several metrics pointing to fewer cuts embedded in 2026 expectations.

Energy-driven inflation risk is a key driver of this repricing. The material notes that oil shocks are beginning to filter through to inflation measures, while core inflation remains comparatively stable so far. That mix helps explain why many expect a hold in April but also why language in the press conference could tilt hawkish if officials emphasize inflation risks.

Analysis: why the “hold” could still move markets

A rate hold can still be market-moving when it arrives alongside a shift in narrative. Here, the narrative hinges on three uncertainties explicitly highlighted in the material: how long the energy shock lasts, whether higher energy costs bleed into core inflation, and how leadership change at the Fed could shape the reaction function.

The unusually wide dispersion of forecasts matters because it can amplify volatility around data releases and Fed communications. With some forecasters expecting cuts and others expecting no easing for an extended period, small changes in inflation or labor-market signals can produce larger changes in pricing across rates, currencies, and risk assets.

Conclusion

The April 28-29 FOMC meeting is widely expected to deliver a steady policy rate at 3.50%-3.75%, but the conversation around oil-driven inflation risks and a possible transition from Powell to Warsh is likely to dominate. With no updated dot plot expected, investors will focus on Powell’s press conference for any clarification on how the Fed is weighing headline inflation against stable core trends and heightened geopolitical uncertainty.