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Fed Hikes Rates - Savings Account/CD Rates?


As expected, the Fed raised the intended federal funds rate from 4.50% to 4.75% (CNN article). This is the highest it has been since March 20, 2001 (see rate history). It seems likely that the Fed will raise rates at least one more time on May 10th. Further rate hikes seem a little more likely after today's meeting.

Which banks will be the first to react? There already have been a few increases today with UmbrellaBank and VirtualBank (CDs). I don't expect one from EmigrantDirect since they just did an increase to 4.50% on March 15. Both HSBC and ING Direct are still active in their promos. After the last Fed rate hike in January, Presidential Bank raised its savings account yield by 0.25% to 4.37% APY. Perhaps they'll do another 0.25% increase this week. GMAC Bank may also be a likely candidate for a rate hike. Its last money market rate hike was March 10th when it increased from 4.60% to 4.65% APY.
Rammesh (anonymous)   |     |   Comment #1
Thanks for sharing the info. So, do you suggest we wait for banks to react to this before opening any short/long term CDs?
Banking Guy
Banking Guy (anonymous)   |     |   Comment #2
If you have money at someplace like HSBC earning 4.80%, you might want to wait. It looks likely that interest rates will rise for at least the next few months.