After presiding over the first US banking crisis since 2008, Federal Reserve officials will focus on reforming regulation. The Fed has promised to complete an examination of the recent wave of bank failures by May 1st. It will address issues like the need for stricter oversight of mid-sized institutions. However, it is likely to omit how the Fed’s monetary stimulus and subsequent tightening may have contributed to the crisis.

In 2020, the FED committed to keeping interest rates near zero while we were in full employment, and inflation had surpassed its long-term target of 2%. This situation led to the biggest interest rate shock banks have seen since the 1980s: five hundred basis points of interest rate increases in 12 months.

Quantitative easing also played a significant role in the recent mini-banking crisis. When the Fed bought billions of dollars of Treasuries and mortgage-backed securities to bring down long-term interest rates, it flooded the banking system with liquidity, which the banks heavily invested in the same longer-term securities at extremely low yields. 
The rate rise resulted in a drop in the price of those same assets, resulting in significant losses for the financial institutions holding them.

The low deposit rates also pushed households to transfer money from banks to higher-yielding money market mutual funds, further draining banks of precious liquidity.

The rate-hike cycle is likely not over. It may take a pause, but as several FOMC members have noted, rates may stay elevated for some time. It takes, on average, nine months for the effects of monetary policy to be fully felt in the economy. Given that there is still a 25bp rate hike to come, there is little chance the FED will lower these rates in the next twelve months.