Heat the olive oil in your Instant Pot using the sauté function for about 1 minute. Add the rice and toast it for 2-3 minutes, stirring occasionally, until it looks a little bit golden. This step prevents mushy rice and adds a subtle nutty flavor that makes a huge difference. Toast until the grains feel slightly dry when stirred.
Pour in the water and chicken broth, then add the salt, black pepper, garlic powder, onion powder, and bay leaf. Stir everything together really well, making sure no rice is stuck to the bottom of the pot. The liquid should cover the rice by about half an inch. Scrape the bottom with a wooden spoon to release any toasted bits.
Close the lid and set the valve to sealing. Press the pressure cook button and set it for 8 minutes on high pressure. Don't panic if it takes a few minutes to come up to pressure—that's totally normal. Your kitchen's gonna smell amazing while it pressurizes.
When the timer goes off, let the pressure naturally release for 5 minutes (don't force it). After 5 minutes, carefully switch the valve to venting and let any remaining steam escape. Wait another 2-3 minutes before opening the lid. Honest truth: I always lift the lid slowly just in case there's a little steam left.
Open the pot and fluff the rice with a fork, breaking up any clumps gently. The instant pot rice recipe should look light and separate, not clumped together. If it looks a little wet, that's fine—it'll absorb the remaining moisture as it sits. Taste a grain to make sure it's cooked through completely.
Stir in the butter, then add the frozen peas and chopped carrots. Mix everything together for about 1 minute to heat the vegetables through. The residual heat from the rice cooks the frozen veggies perfectly without making them mushy. This is where your pressure cooker rice gets that beautiful color from the peas.
Remove the bay leaf and serve immediately while it's hot. The instant pot rice recipe feeds 4 people as a generous side dish. If you're making this ahead, transfer it to a container and refrigerate for up to 4 days.