The Fed's latest move confirms it's trying to thread the needle between cooling inflation and helping banks in turmoil

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The nation's central bank is keeping its foot on the gas pedal when it comes to fighting inflation.

On Wednesday, the Federal Open Market Committee (FOMC) announced it is increasing interest rates by 25 basis points for the second time this year. This announcement comes on the heels of positive economic data — inflation slowed in February as the labor market stayed hot, adding 311,000 jobs — but as Fed Chair Jerome Powell has previously indicated, there's still more work to be done to get the US to its pre-pandemic goal of a 2% inflation level.

"We expect 2023 to be a year of significant decline in inflation," Powell said in February. "This process is likely to take quite a bit of time," he added. "It's not going to be, we don't think, smooth. It's probably going to be bumpy."

The FOMC statement released on Wednesday also said "some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time." So while the committee is slowing interest rate hikes for now, they plan to continue increases this year.

For months now, some Democratic lawmakers have been urging Powell to pause the rate hikes — especially now, following a chaotic couple of weeks for the banking industry. Two weeks ago, federal regulators shut down Silicon Valley Bank, and later bailed out the bank's depositors, in a move that drew criticism from both sides of the aisle. 

Virginia Sen. Mark Warner told Punchbowl News that "I do think a pause would be appropriate in the sense that you're trying to slow down the economy a little bit and clearly, this banking issue is slowing the economy."

"But I've also been generally complimentary of the Fed," he said. "This is a classic game of, damned if you do, damned if you don't."

"He's failing in both jobs, both as the oversight manager of these big banks, which is his job, and also what he's doing with inflation," Warren said.

Still, Powell has repeatedly stated his belief that it's better to raise interest rates too much than too little to fight inflation, meaning further hikes aren't entirely out of the question this year.

"I continue to think that it's very difficult to manage the risk of doing too little and finding out in six or 12 months that we actually were close but didn't get the job done and inflation springs back and we have to go back in, and now you really do worry about expectations getting unanchored," Powell said last month.