Interest rates are expected to stabilize soon or even begin falling. The risk is that core inflation might not come down, and a second tightening cycle might be needed.

"In light of the heightened uncertainty and the emphasis on 'flexibility,' the March [FOMC] minutes offer very little guidance on the policy outlook going forward."

The 25 bps rate increase is a gamble that the banking crisis can be contained.

While the Fed promises to "fully protect all depositors," some question the moral hazard of protecting banks from the effects of poor decision-making.

"Central banks have become a source of macro volatility, rather than a dampener," says one economist.

January's personal consumption expenditures (PCE) price index came in hotter than expected today, rising 5.4% from a year earlier vs. a 5% increase in December.

According to the Fed minutes, "maintaining a restrictive policy stance until inflation is clearly on a path toward 2 percent is appropriate from a risk-management perspective."

"We think we are going to need to do further rate increases. The labor market is extraordinarily strong," Powell said Tuesday.