The Fed Meets This Week—What It Could Mean for Savings and CD Rates

Core Insights - The Federal Reserve is expected to keep interest rates unchanged in its upcoming meeting, marking a pause after three consecutive rate cuts totaling 0.75 percentage points [1][2]. Economic Context - Inflation remains a significant concern, with the latest Consumer Price Index indicating a rate of 2.7%, above the Fed's target of 2%, which contributes to the cautious approach of policymakers [3]. Market Expectations - Markets currently estimate a 60% chance of a quarter-point rate cut by the Fed's June meeting, although these predictions are subject to rapid changes based on economic data [4]. Savings Rates - Savings account rates typically do not fluctuate significantly during Fed pauses, as banks often wait for clearer signals before adjusting rates [6]. - Despite recent rate cuts, competitive pressures have kept the best savings account yields historically high, ranging from 4% to as high as 5% [7][8]. Certificates of Deposit (CDs) - CD rates tend to respond differently than savings account rates, often adjusting in anticipation of Fed moves. Current top CD rates are around 4.50% APY [9][11]. - Timing is crucial for savers considering CDs, as locking in a competitive rate sooner can provide certainty against potential future rate adjustments [12].