US Federal Reserve Chair Jerome Powell's tenure as chief will end in May, but he could stay on as a board member until 2028 (Kent Nishimura) · Kent Nishimura/AFP/AFP

The US Federal Reserve is widely expected to hold interest rates steady on Wednesday after a key policy meeting, likely the last chaired by central bank chief Jerome Powell, a frequent target of President Donald Trump's ire.

Policymakers will weigh the risks of surging energy prices and snarled supply chains due to the US-Israel war on Iran, with analysts widely expecting a third pause in a row as the effects of the conflict ripple through the world's largest economy.

All eyes will be on Powell's future plans at what could be his final press conference as head of the Fed on Wednesday afternoon.

While the central bank chief's tenure as chair ends May 15, his term as a member of the board of governors continues until January 2028.

Since returning to power last year, Trump has frequently criticized and insulted Powell for not cutting interest rates -- a policy that would turbocharge economic activity but could fuel inflation.

In January, Powell made headlines when he revealed Trump's Justice Department had opened a criminal probe against him over cost overruns on a building renovation project.

Powell called the move a pressure tactic designed to erode the Fed's independence, and vowed to stay on until the investigation was concluded "with transparency and finality."

Republican Thom Tillis on the Senate's banking committee supported Powell's position, saying he would hold up confirmation of Trump's Fed chair nominee, Kevin Warsh, until the probe was dropped or completed.

On Friday, the Justice Department said it was dropping the investigation, and Tillis indicated days later that he would support Warsh's confirmation.

Trump's assaults on the Fed have been unprecedented. He has also attempted to unseat another Fed governor, Lisa Cook, over fraud allegations. A Supreme Court case on that attempt is ongoing.

Given that context, analysts were divided on whether Powell would stay on as a member of the board even after his term as chief ends -- a situation that would be unusual, but not without precedent.

Gregory Daco, chief economist at EY-Parthenon, said he thought Powell would remain, adding that it "would help preserve institutional continuity, anchor the existing communication approach, and provide a stabilizing counterweight during the transition."

- Future path -

While much attention will be on Powell's plans, policymakers will be focused on the way forward for the US economy, as it battles years of higher-than-expected inflation and recent weak jobs growth.