The US central bank is widely expected to keep interest rates unchanged at its policy meeting next week, as energy prices stay high and supply chains are snarled due to the war in the Middle East.

The Federal Reserve’s two-day meeting, starting Tuesday, could be Chairperson Jerome Powell’s last 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 in a range of 3.50 percent to 3.75 percent, extending their pause since the start of the year.

Uncertainty still elevated

“We still have a very high level of uncertainty on what’s happening in the Middle East,” KPMG senior economist Kenneth Kim told AFP.

Oil and gasoline prices remain elevated even after peaking, 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 of the war with Iran remains unknown.

The oil price hikes came after US-Israeli strikes targeting Iran from 28 February sparked Tehran’s retaliation in virtually closing the Strait of Hormuz -— a key waterway for energy transit.