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Future Fed Rates and the Best Cash Options


This LA Times article looks at the future of interest rates and some options for cash savers. It looks likely that federal funds rate will go up tomorrow and in December. However, there's uncertainity for next year especially after Greenspan retires. Cash savings may be very appealing if the Fed goes too far and causes a recession.

One recommendation was a laddering technique as I described in this previous post. As I mentioned in that post, it doesn't make much sense to use long term CDs. The article's suggestion was a ladder composed of money market account, 6-month CD and a 1-year CD. The article gave a stronger recommendation for laddering with Treasury bills which are exempt from state income tax.