The Federal Reserve is expected to hold interest rates steady on Wednesday as officials debate whether to flag risks of rising inflation in a policy statement issued after what may be Jerome Powell's final meeting as head of the U.S. central bank.

With oil prices high and rising again due to the U.S.-led war with Iran, policymakers ahead of the Fed's latest two-day session said ‌they were increasingly concerned that elevated energy costs could evolve from a one-off shock into higher underlying inflation, with ​interest rates needing to stay on hold longer than expected or, in the extreme, to move up.

Stalemated negotiations and the continued closure of the strategic Strait of Hormuz have pushed the global benchmark oil price ⁠again above $110 a barrel compared to about $70 before the U.S.-Israeli bombing campaign against Iran started on Feb. 28.

The Fed's ​preferred measure of inflation is about a percentage point above the central bank's 2% target, and the March numbers due to ⁠be issued later this week are expected to rise even higher.

Traders see little chance the Fed will lower rates before the middle of next year, in effect a bet against incoming Fed leader Kevin Warsh's ability to convince his colleagues that rising U.S. productivity will translate into lower inflation and allow for looser ‌monetary policy.

"The news since the last meeting in March - better labor market data but no change in disappointingly ​high inflation data - may shade ‌the discussion a bit more hawkish," but not so much that the Fed will hint at the possible need for rate hikes in its statement, said Michael Feroli, chief U.S. ‌economist at JPMorgan. Surprisingly strong job growth in March pushed the unemployment rate lower to 4.3%.

The Fed's interest rate decision and new policy statement will be released at 2 p.m. EDT (1800 GMT). Powell is scheduled to ⁠hold a press conference half an hour later.

Along with ‌elaborating on the results of the meeting ⁠and answering questions about the economic outlook, Powell may well say more about his plans now that Warsh is expected to be confirmed as Fed chief by ⁠the Senate ⁠in time for the central bank's June 16-17 meeting.

Warsh's nomination began moving forward last week after the Department of Justice dropped a criminal investigation into a Fed building project ‌that key Republican senators saw as a groundless attack on Powell and the central bank's independence.

The Senate Banking Committee is scheduled to vote on Wednesday to recommend Warsh be confirmed by the full Republican-controlled Senate.

Powell's tenure as Fed chief ends on May 15, but his separate ‌term as a ​member of the central bank's Washington-based Board ‌of Governors extends to January of 2028.

At a press conference in March, Powell said he would not leave the board "until the investigation is well and truly over," but left open whether he might continue serving as a ​governor even if the probe was ended.

"I have not made that decision yet. And I will make that decision based on what I think is best for the institution and for the people we serve," Powell said at the ‌time.