• At the FOMC meeting on April 28-29, 2026, the US Federal Reserve (Fed) is expected to keep the policy rate unchanged at 3.50–3.75 percent while assessing the economic and inflation outlook amid heightened uncertainty surrounding the Middle East conflict. Looking ahead, the Fed is likely to maintain policy rates at the present level for a longer period, and any rate cuts may be delayed beyond previous expectations, depending largely on developments in the Middle East and the direction of global energy prices.
• Under the base-case scenario, KResearch expects the Fed to deliver one rate cut in the second half of this year, consistent with the Dot Plot from the previous meeting. This assumes that tensions in the Middle East – particularly risks related to transit through the Strait of Hormuz – will ease by June 2026, allowing global crude oil prices to gradually decline and making inflationary pressures only a temporary factor.
• However, if the Middle East conflict drags on and keeps oil prices above USD 100 per barrel throughout the year, the risk of stagflation will rise significantly. Under such a scenario, the Fed is likely to keep policy rates steady for the entire year.
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