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Despite recent turmoil in the banking industry, the Federal Reserve on Wednesday announced that is has decided to continue raising interest rates.
The Fed said it has decided to raise the target range for the federal funds rate by another 25 basis points to 4.75 to 4.50 percent.
The latest increase matches the rate hike seen in early February, which came after the central bank raised rates by 75 basis points in November and by 50 basis points in December.
While the Fed also said additional policy firming may be appropriate, that marks a shift from saying ongoing increases in rates will be appropriate.
The central bank's latest projections suggest the Fed plans to raise rates just one more time this year to a range of 5.0 to 5.25 percent.
The continued increase in rates comes as the Fed noted inflation remains elevated, with the central bank seeking to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.
The Fed forecast core consumer price inflation at 3.6 percent by the end of 2023, up slightly from the 3.5 percent forecast in December. The GDP growth projection was lowered to 0.4 percent from 0.5 percent.
In its statement, the Fed described the U.S. banking system as "sound and resilient" despite the recent failures of Silicon Valley Bank and Signature Bank.
The Fed acknowledged recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation but noted the extent of these effects is uncertain.
"The 25bp rate hike and new projections unveiled by the Fed today were towards the more dovish end of potential outcomes," said Andrew Hunter, Deputy Chief U.S. Economist at Capital Economics.
He added, "Nevertheless, with the crisis making us more confident in our view that the economy will fall into recession soon, we suspect the Fed will be cutting rates again before too long."
The central bank's next monetary policy meeting is scheduled for May 2-3, with CME Group's FedWatch Tool currently indicating a 47.9 percent chance the Fed will leave rates unchanged and a 51.6 percent chance of another 25 basis point rate hike.
