US Federal Reserve hikes interest rate by 25 basis point to curb inflation despite banking turmoil

The US central bank has raised interest rates again, despite fears that the move could add to financial turmoil after a string of recent bank failures.

The Federal Reserve increased its key rate by 0.25 percentage points and said more action could be appropriate as consumer prices continue to climb.

The Fed has been raising borrowing costs to try to slow the economy and ease pressures pushing up prices. But sharp rate rises have led to strains in the banking system.

Two US banks – Silicon Valley Bank and Signature Bank collapsed this month, buckling in part due to problems caused by higher interest rates.

But authorities around the world have said they do not think the failures threaten widespread financial stability and need not distract from efforts to bring inflation under control.