The move follows the U.S. Federal Reserve's decision to raise its target interest rate by three-quarters of a percentage point for a second consecutive month to tame soaring inflation.

"Today's move is further admission from the Federal Reserve that it was too generous with its monetary policy in 2021 and that it is trying to reverse things quickly," said Michael Ashley Schulman, chief investment officer at multi-family office Running Point Capital Advisors.

The central bank walks a tight rope between raising interest rates to stamp out inflation while at the same time preventing the economy from slipping into a steep recession.

"If the U.S. enters a recession now, it would be a most unusual one with plentiful credit, low unemployment and high inflation - remarkable dynamics not normally associated with an economic slowdown," Schulman added.

Fed chairman Powell during a press conference said he expects another unusually large increase in rates at the next meeting due to an extremely tight labor market and high inflation.

Decades-high inflation, which shows no signs of cooling, has gripped markets after sanctions on Russia curtailed trade and worsened supply chain bottlenecks.

Banks usually stand to gain from high interest rates as they earn the difference between rates of borrowing and costs of lending.