Federal Reserve continue to see inflation elevated. Their target is 2% to reach price stability. Their believe is w/o price stability businesses will not function. To fight inflation, the committee raised interest rates .25% percent to a range of 4.75% to 5.0%.
With the banking closure of SVB and weakening banking sector from deposits moving out into money market and bonds which are offering better returns, there will be a tightening of loan creation. Loans will now be much harder to get approved since banks themselves have less funds to lend out and for funds that they do lend out they need to ensure the borrowers are high quality and risk of default is low. In this environment the economy will likely slow and will help the Federal Reserve achieve its goal of slowing the economy and lower inflation. This is partly th reason for the .25% raise instead of .50%.