Dedicated to Deposits: Deals, Data, and Discussion

Fed Continues to Keep Rates Unchanged - Future of CD and Savings Account Rates?

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The Fed decided to keep the target for the federal funds rate at 2% for the second consecutive meeting. Here's the FOMC press release. The Fed expressed concerns for both an economic slowdown and higher inflation. Opinions from economists in both this CNN article and this USA Today article expect the Fed to hold off on rate changes for several months. Unless there's some large economic shock like a major bank failure, the expectation continues for rate hikes either for late this year or early next year. The final three scheduled FOMC meetings for this year are on September 16, October 28-29 and December 16th.

Even though the Fed has kept the fed funds rate at 2% since April, many banks have been raising their CD rates in the last several months. The average APY for the top 10 12-month CDs on May 3rd was 3.99%. The average APY for the top 10 12-month CDs is now up to 4.26%. However, savings account rates have fallen. The average APY for the top 10 non-promo rates for savings accounts is now 3.66%. This was 3.82% back on May 3rd. However, savings account rates have started to turn around. The average APY for the top 10 non-promo savings accounts was only 3.57% on July 19th.

With banks in need of deposits and with the competition that exists, we may continue to see higher rates on both savings accounts and CD rates even while the Fed is in a holding pattern.


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