Federal Reserve hikes its key interest rate a quarter point

The Federal Reserve is raising its key interest rate 0.25 percentage point, underscoring central bankers' commitment to fighting inflation even if that heightens the financial pressure on the the country's banks.

The Fed's benchmark rate is rising to a range between 4.75% and 5%, the bank's rate-setting body said in a statement.

The sudden collapse of Silicon Valley Bank on March 10 and of New York's Signature Bank two days later has spurred fear that worried depositors could rush to withdraw their money from other regional lenders, sparking a wider crisis.

In its statement, the Fed's rate-setting committee noted that banks' newfound caution would likely drag on the economy, writing, "Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain."

Fed Chair Jerome Powell is set to address reporters at 2:30 p.m. Eastern time, when he will offer his outlook on the economy.