A flurry of decisions by major global central banks is expected to mark this week in global markets as policymakers try to navigate rising pressures on domestic economies following the start of the conflict between the U.S., Israel and Iran at the end of February.

The U.S. central bank, the European Central Bank (ECB) and the Bank of England (BoE) are all due to gather at their respective monetary policy meetings this week, with expectations largely tilted to the prospect of all of them remaining wary of risks and keeping rates on hold, and thus restraining from hikes at the moment.

The Federal Reserve (Fed), which meets first, is widely expected to keep interest rates unchanged as energy prices stay high and supply chains disrupted due to war in the Middle East.

The Fed's two-day meeting, starting Tuesday, could be the last one for Jerome Powell at the helm of the independent institution.

But it takes place against a tricky backdrop.

Powell's successor has faced a bumpy road to confirmation, while policymakers battle competing pressures as steeper fuel prices drive inflation and job market worries linger.

Fed officials are set to keep rates steady at a range between 3.50% and 3.75%, extending their pause since the start of the year.

"We still have a very high level of uncertainty on what's happening in the Middle East," KPMG senior economist Kenneth Kim told Agence France-Presse (AFP).

Oil and gasoline prices remain elevated even if they have peaked, meaning "there's certainly an energy shock that's still impacting both consumers and businesses," he said.

The Fed has a dual mandate of maintaining price stability and low unemployment. It tends to keep interest rates high to curb inflation or lower them to spur growth, meaning that current conditions pull officials in different directions.

Navy Federal Credit Union Chief Economist Heather Long expects Powell to be "non-committal" on the path of rates, as the full impact from the war on Iran remains unknown.

The oil price hikes came after U.S.-Israeli strikes targeting Iran from Feb. 28 sparked Tehran's retaliation in virtually closing the Strait of Hormuz, a key waterway for energy transit.

Containing inflation

Fed officials will likely focus more on containing inflation than the job market at this meeting, with the war entering its ninth week.

The strait is also a key passage for fertilizers, and disruptions threaten to hit food production.

Already, U.S. consumer inflation reached its highest level in nearly two years in March at 3.3% as energy costs skyrocketed.

Fed Governor Christopher Waller, who earlier backed lower rates to support employment, indicated this month that a prolonged conflict could make it hard for the central bank to cut rates this year.

If there were high inflation and a weak labor market, one would have to balance risks on both sides.

This "may mean maintaining the policy rate at the current target range if the risks to inflation outweigh those to the labor market," he told an Alabama event.

KPMG's Kim said solid hiring recently "gives the Fed some cushion" to temporarily focus more on prices. Analysts will monitor if the Fed signals in its post-meeting statement that rate hikes are a possibility.

'Critical juncture'

The Fed is also taking its next steps under intense political scrutiny.

President Donald Trump has made no secret of his wish for lower interest rates, and regularly slammed Powell for not cutting them aggressively.

Beyond rhetoric, Trump has sought to oust Fed Governor Lisa Cook over claims of mortgage fraud. The Supreme Court is set to rule on whether he can fire her.

Meanwhile, Trump's choice of new Fed chairperson, Kevin Warsh, has faced a bumpy road to confirmation.

Republican senator Thom Tillis on the Senate Banking Committee vowed to block Fed appointments until a Justice Department probe into the Fed and Powell is resolved, setting up a potential impasse on the panel Warsh needs to clear.

But the Department of Justice (DOJ) said Friday it would drop the investigation linked to renovation costs overruns, potentially paving the way for Warsh's ascendance.

Asked by journalists on Saturday about the DOJ's move, Trump said he still wants to look into the cost of the Federal Reserve building renovations, which he has claimed is too high.

"I tell you, I want to find out. I have an obligation to find out," he said.

Warsh has repeatedly pledged to remain independent if confirmed.

"We're at a critical juncture for the Fed," EY-Parthenon chief economist Gregory Daco told AFP.

"It may be that under Warsh, we're going to see less Fed transparency, less Fed communication than we had in the past," he said, referring to Warsh's confirmation hearing testimony.

Powell's term as chair expires May 15, and he originally intended to stay on the Fed's board of governors until the probe on him is completed. All eyes will turn on him, and if he shares any plans at his scheduled press briefing on Wednesday.

ECB, BoE likely to hold too

Meanwhile, according to recent polls, both the ECB and BoE, are also expected to keep their policy rates unchanged on Thursday despite risks to inflation in the U.K. and slowing manufacturing in the eurozone.

Bank of England policymakers will "almost certainly" hold interest rates at 3.75% at their meeting, despite the Iran war pushing up the cost of living, economists have said.

However, experts have said a future interest rate increase could still be a possibility if firms and households continue to face inflationary pressures.

The Bank of England's nine-strong Monetary Policy Committee (MPC) will vote on whether to maintain, increase or decrease its base interest rate on April 30. The bank will also publish its first full monetary policy report and set of economic forecasts since the Middle East conflict began in late February.

This week, a raft of economic data has shown that the conflict has helped to drive inflation higher.

Data published by the Office for National Statistics (ONS) on Wednesday showed that inflation climbed to 3.3% in March, a three-month high, on the back of accelerating fuel prices.

The price of motor fuels jumped by 8.7% month-on-month, marking the largest increase since June 2022, as disruption to oil production and transportation drove diesel and petrol prices higher.

Despite these figures, economists broadly expect the bank's rate-setters to maintain the current interest rate.

Oxford Economics chief U.K. economist Andrew Goodwin said: "We expect the MPC to keep bank rate unchanged at 3.75%, with most committee members seemingly keen to hold policy at its current restrictive level as they gather more information about how the energy shock is feeding through to the economy."

The European Central Bank is also expected to hold its deposit rate on April 30 but hike it in June, according to just over half of economists polled by Reuters.

Economists, however, failed to agree on what would follow June's quarter-point lift, largely seen as an ‌insurance move because the extent of any second-round inflationary effects arising from higher fuel prices was still unclear.

ECB policymakers have sounded more determined than their peers to contain inflation but have played down the likelihood of an immediate rate rise, citing insufficient evidence that energy costs, which they can't control, are spilling into broader price rises.

The central bank is still haunted by its slow reaction to a rapid inflation surge in 2022, while also wary of repeating its 2011 mistake, when it raised rates twice in four months as commodity prices climbed, making a eurozone debt crisis worse.

The European Central Bank must ‌be cautious when setting interest rates, given the great uncertainty associated with the war in Iran, ECB Vice-President Luis de Guindos said ​on Tuesday.

All but one of 85 economists in the April 17 to 23 Reuters poll predicted the ECB would hold its deposit rate at 2% next week.

Just over half, or 44, forecast a June increase to 2.25%, while 40 expected no change. Until late last month, most economists had expected rates to stay unchanged this year.

"The ECB will try to avoid a repeat of 2011. They need to have some clarity that whenever they hike, they're not going to have to undo that quickly. And that's a reason to move in June rather than in April," Ruben Segura-Cayuela, head of the European economics research at Bank of America, said.

"There's still a scenario in which the ECB looks through the shock ... The risk is the activity will react a bit more negatively than we are expecting. That might create additional incentives to delay hikes. And ‌once you delay hikes, at some point, you might decide not to hike at all."