Set Instant Pot to sauté and brown onion and garlic in 1 tbsp oil about 3 minutes.
Add chicken, broth, thyme, salt, pepper, and frozen vegetables; secure lid and set to High Pressure for 8 minutes.
While chicken cooks, mix flour, baking powder, ¼ tsp salt, butter, and milk into a shaggy dumpling dough.
Quick-release pressure, remove chicken to shred with forks, then stir shredded chicken back into pot.
Drop spoonfuls of dumpling dough on top, switch to Manual and set to High Pressure for 6 minutes.
Natural release 5 minutes, then quick-release any remaining pressure. Fluff dumplings gently and adjust seasoning.