FOMC April 2026: What markets expect from the Fed’s next move

Stanislav Bernukhov

Exness senior trading specialist

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Will the FOMC interest rate decision April 2026 move markets—or is something else more important? While rates are expected to stay unchanged, this analysis breaks down the Fed interest rate outlook for 2026, key inflation drivers, and what traders should watch beyond the headline decision.

The Federal Reserve will announce its interest rate decision on 29 April 2026, which is expected to remain unchanged at 3.5 - 3.75l, according to the CME Group FedWatch tool. However, the intrigue surrounding the interest rate is usually not associated with the upcoming rate decision (which is generally priced in) but rather the expectations of market participants, narratives promoted by the Fed’s chief, and what is said between the lines.

Expectations and agenda:

The interest rate is expected to remain at the current level, with a full consensus around the current projection. Inflation in the US was higher than expected, peaking at 3.3%, fueled mainly by the geopolitical escalation in the Middle East. Traders fear that the Strait of Hormuz will remain closed for longer periods, resulting in supply disruptions.

WTI and Brent Oil futures have rebounded from the previous week’s lows, evidence that no solutions or agreements have been reached yet.

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Key takeaways

The FOMC interest rate decision April 2026 is expected to remain unchanged. Markets have fully priced in a hold at 3.5–3.75%, shifting focus away from the decision itself toward future Fed signals.
Inflation and oil prices remain the key drivers of the Fed’s interest rate outlook for 2026. Geopolitical risks in the Middle East and potential supply disruptions continue to influence short-term inflation expectations.
Markets are starting to anticipate gradual rate cuts later in 2026. SOFR futures suggest stable rates now, with a growing bias toward easing as inflation pressures potentially decline.
Fed communication and leadership changes could outweigh current data. Expectations around future policy may be shaped more by messaging and the potential appointment of a new Fed chair.
Market volatility is likely to come from the Fed’s tone, not the rate decision. Traders should watch the press conference closely, as Powell’s guidance often drives post-decision market moves.

Expectations and agenda

WTI and Brent Oil futures have rebounded from the previous week’s lows, evidence that no solutions or agreements have been reached yet.

CME Group FedWatch Tool probabilities for FOMC interest rate decision April 2026, showing market expectations for Fed policy.

CME FedWatch Tool showing market-implied probabilities for the FOMC interest rate decision April 2026, with consensus expectations pointing to unchanged Fed policy.

However, the forecast points to a possible further decline in inflation, as traders look forward to a potential long-term ceasefire and agreement between the US and Iran before June 2026. This means the interest rate hike is most likely off the table, and the main intrigue would be whether the current rate will hold longer or decrease faster.

If we look at the CME Group SOFR indicator, it shows a distribution of expected yields for 2026, based on futures for secured overnight financing rate. According to futures traders, the expected December 2026 level may hold at 96.36, suggesting rates might stay the same, but expectations could slowly shift towards a decline as we move through the year.

SOFR futures distribution chart reflecting Fed interest rate outlook 2026 and expected rate path based on market pricing.

SOFR futures distribution highlighting the Fed interest rate outlook for 2026, showing expectations of stable rates with a gradual shift toward potential easing later in the year. Source: cmegroup fedwatchtool

What’s driving the Fed interest rate outlook in 2026

The Federal Reserve serves its dual mandate to keep inflation under control and support the labor market, which means maximum employment.

The labor market shows signs of robustness despite local crises, so the main variable in this equation is inflation.

The situation around the Strait of Hormuz, and the disruption in oil supplies led to the March uptick in inflation The situation doesn’t seem to be resolved, but traders appear to be waiting for a resolution to the situation by June, which is also confirmed by collective bets in prediction markets, and the projection for inflation from tradingeconomics.com, which assumes the highest value of inflation in April, after which it may decrease in the summer (summertime period is also known for the seasonal decline of economic activity).

US inflation trend 2026 influenced by oil prices and geopolitical risks impacting FOMC interest rate decision expectations.

US inflation trend in 2026, with recent uptick driven by oil supply risks and geopolitical tensions, shaping expectations for the upcoming FOMC rate decision. Source tradingeconomics.com

From a monetary policy standpoint, there are no substantial drivers in the interest rate domain. The main drivers influencing the Fed’s policy might not be associated with current economic projections, but with Kevin Warsh becoming the Fed’s chief later this year.

Warsh appeared before Congress to deliver his testimony and answer questions from senators, but he remains a candidate and has not yet been approved. According to analysts, Warsh’s stance is not dovish per se, but they believe he may need to adjust it to align with President Trump, who favors lower interest rates. The Fed chair, however, is expected to maintain an independent view on the economy and monetary policy.

How to trade the FOMC interest rate decision

First off, volume and activity might slow ahead of the publication of interest rates, and no major price shifts are expected. We know from historical studies that stock markets might experience growth ahead of the Fed's decision, but with limited volatility.

The announcement of a decision is not usually a surprise unless it differs from expectation (that would create sharp volatility). So, volatility usually remains muted ahead of the press conference.

The Fed’s press conference, held 30 minutes after publication, is when traders try to adjust expectations around monetary policy, and big money may start flowing in.

This period may offer a decent entry point for strategic long positions, especially if the market gains some clarity on any positive scenarios.

With regard to Jerome Powell, he’s known as a “softener” when it comes to market expectations, as he often communicates confidence. Traders refer to it as the “Powell effect”, and stocks and stock indices, gold, and other speculative assets may gain support during Powell’s speech. This effect may not be working as accurately as in the past, but it still tends to have an impact.

In general, interest rate decisions and the Fed’s press conferences have a strong impact on market volatility, so be careful and consider that while planning your trades.

Final thoughts: Outlook for the Fed interest rate path

From my point of view, the FOMC interest rate decision in April 2026 is less about the rate itself and more about how the Fed frames the path ahead. With markets already pricing in a pause, I’m paying closer attention to signals around inflation trends, geopolitical risks, and any shift in tone from Powell or future leadership. I think the Fed interest rate outlook for 2026 is gradually tilting toward easing, but the timing will depend heavily on how quickly inflation stabilizes. For me, this is a classic case where reading between the lines matters more than the headline decision.