WASHINGTON — Next month, the Federal Reserve is planning to increase interest rates by 25 basis points, then pause for the rest of the year, according to a Reuters poll of economists.

Policymakers are concerned recent bank failures could negatively impact the economy, leading to a pullback in spending.

If the banking worries fade and the labor market remains strong, policymakers may decide that more rate increases are needed to stifle high inflation.

The upcoming May 2-3 meeting will be crucial, but officials have indicated that what they do beyond this meeting will depend on the state of the economy.

“It is still too early to gauge the magnitude and duration of these effects, and I will be closely monitoring the evolution of credit conditions and their potential effects on the economy,” said New York Fed President John Williams.

Before the blackout period began at midnight on Friday, Williams was the only member of Fed leadership who spoke publicly about monetary policy. Powell has been quiet since last month, except for a few comments on financial regulation. Also, the Fed vice chair’s position has been empty since Brainard left for the White House in February.

Since last year, financial firms have been restricting access to credit as the Fed took quick measures to counteract high inflation by raising borrowing costs.

Now, in the wake of the collapses of Silicon Valley Bank and Signature Bank, experts warn that a sudden and substantial increase in this trend could potentially trigger a recession.

The situation has raised concerns among economists and policymakers alike, as they assess the impact of these events on the wider economy.

“They’re mostly on the same page for one last hike, in May, without any pausing before reaching the peak,” said Derek Tang, an economist at LH Meyer/Monetary Policy Analytics in Washington.

“The sticking point is when to ease and more crucially what to say about it.”

While he is not a voting member on monetary policy this year, St. Louis President James Bullard has made his position clear. He anticipates that the banking issues will be resolved without significant upheaval and supports raising rates into the range of 5.5% to 5.75%.

Chicago Fed President Austan Goolsbee is advocating a more measured approach, stressing the importance of thoroughly assessing the potential impacts of the recent bank failures on the economy before implementing any significant policy changes.

Even some of the typically hawkish officials are hinting that the rate hike campaign may be nearing its end, while still emphasizing that the ultimate decision will be based on the data.

“We are much closer to the end of the tightening journey than the beginning,” Cleveland Fed President Loretta Mester said earlier this week.

“How much further tightening is needed will depend on economic and financial developments and progress on our monetary policy goals.”