BBC News: <\/p>\n\n\n\n
The US central bank has raised interest rates again, despite fears that the move could add to financial turmoil after a string of bank failures.<\/strong><\/p>\n\n\n\n The Federal Reserve increased its key rate by 0.25 percentage points, calling the banking system “sound and resilient”.<\/p>\n\n\n\n But it also warned that fallout from the bank failures may hurt economic growth in the months ahead.<\/p>\n\n\n\n The Fed has been raising borrowing costs in a bid to stabilise prices.<\/p>\n\n\n\n But the sharp increase in interest rates since last year has led to strains in the banking system.<\/p>\n\n\n\n Two US banks – Silicon Valley Bank and Signature Bank – collapsed this month, buckling in part due to problems caused by higher interest rates.<\/p>\n\n\n\n There are concerns about the value of bonds held by banks as rising interest rates may make those bonds less valuable.<\/p>\n\n\n\n Banks tend to hold large portfolios of bonds and as a result are sitting on significant potential losses. Falls in the value of bonds held by banks are not necessarily a problem unless they are forced to sell them.<\/p>\n\n\n\n Authorities around the world have said they do not think the failures threaten widespread financial stability and need to distract from efforts to bring inflation under control.<\/p>\n\n\n\n Last week, the European Central Bank raised its key interest rate by 0.5 percentage points.<\/p>\n\n\n\n