It is now the 9th time that the Fed has increased the interest rate in continuation of its battle against inflation. The decision has been made at a time when the U.S banking sector has just witnessed two recent collapses of its regional banks.

The policymakers of the Fed had voted unanimously for an increase in the rate of interest, bringing it up to just under 5 percent. This further hike in the interest rate has made it extremely difficult for the people to carry credit card balance or look for car loans.

The committee members believe that marginally higher rates may be required to restore price stability, with policymakers predicting that rates will climb by this year end by another quarter-percentage point, according to newly released projections.

“The Committee anticipates that some additional policy firming may be appropriate,” the Fed said in a statement.

While there were calls for the central bank to temporarily pause its rate hikes in light of the Signature Bank and Silicon Valley Bank collapses earlier this month, the banking system’s stress seemed to ease over recent days, and larger withdrawals from the regional banks have “stabilized,” according to Janet Yellen, the Treasury Secretary.

“The U.S. banking system is sound and resilient,” the Fed’s monetary policy statement said.

However, consumer prices continue to rise rapidly, with February’s annual inflation at 6%, well above the target of 2%, and the central bank is especially concerned about the escalating cost of services, such as  streaming TV subscriptions and airline tickets.

Fed Chairman Jerome Powell has highlighted that high inflation brings significant hardship on consumers, particularly for those who are least able to cope with the increased costs of necessities like transportation, housing, and food.

Moreover, the Fed is facing scrutiny for its supervision of the failed banks, particularly the risk management practices of the Silicon Valley Bank. While Fed supervisors identified issues years ago, the problems were not corrected, leading to the California lender’s takeover by the US government after a significant bank run.

The Fed’s vice chairman for supervision, Michael Barr, has called for a thorough review of how the firm was supervised and regulated, acknowledging that the central bank must exercise humility in the process.