About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

Featured Savings Rates

Popular Posts

Featured Accounts

FOMC Statement Suggests Longer Wait for Savers


FOMC Statement Suggests Longer Wait for Savers

The fifth FOMC meeting of the year finished this afternoon with a release of the policy statement. Unlike the last meeting, there was no press conference or release of economic projections. As expected, no policy changes were announced. The only changes in the statement were slightly more pessimistic views of the economy. Below are three examples:

”Moderate pace” changed to “modest pace”

from June 19th statement:

Information received since the Federal Open Market Committee met in May suggests that economic activity has been expanding at a moderate pace.

from July 31st statement:

Information received since the Federal Open Market Committee met in June suggests that economic activity expanded at a modest pace during the first half of the year.

Addition of “but mortgage rates have risen somewhat”

from June 19th statement:

Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth.

from July 31st statement:

Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen somewhat and fiscal policy is restraining economic growth.

Addition of “recognizes that inflation persistently below its 2 percent objective could pose risk to economic performance”

from June 19th statement:

The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

from July 31st statement:

The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.

These statement changes support the observations in this Calculated Risk GDP post that “the data showed all indicators are still below the [FOMC] June projections.” So this may give the Fed a reason to delay tapering of its bond buying program. A delay in tapering will likely mean a delay in rate hikes. There have been expectations that we’ll see rate hikes sometime in 2015. I would say the odds of that happening has diminished slightly.

Esther L. George continued to vote against the FOMC action with her same inflation-hawk argument:

who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

She was the only member to vote against the action. Unlike the last meeting, James Bullard did not dissent. However, in June he was actually arguing for more accommodation. I’m not sure what changed to make him vote for the action.

Future FOMC Meetings

The next two FOMC meetings are scheduled for September 17-18 and October 29-30. The September meeting will include the summary of economic projections and a press conference by Chairman Bernanke.

Related Posts

Anonymous   |     |   Comment #1
Seniors are 'the doomed' generation.

We can't risk our principal in the artifically inflated stock market and thus must live on the meager income our savings generates. 

We are at the mercy of Bernacke and folks, he ain't very merciful!
Anonymous   |     |   Comment #4
#1: If you think seniors are the doomed generation, think what our youngsters are heading into: retail and food service jobs paying minimum wage with no benefits, expensive college degrees that got you into debt with only low-level jobs to look forward to, continued overseas exporting of jobs, moving back in with mom and dad, shaky entitlements such as social security, etc. Except for the 1% (and I have nothing against them) I would just say "the doomed" and leave it at that.
Anonymous   |     |   Comment #2
Don't forget the lies Japan's savers are hearing for 23 years and counting. That is our future. Maybe next year or maybe the year after or on second thought maybe in 5 years or maybe never.
mrvirgo   |     |   Comment #3
Anynymous #2  Personally, I'm counting on "maybe never" as a solid given.  I hope I can aquire a taste for dog food soon (grin).
Shorebreak   |     |   Comment #5
The FOMC is becoming the perpetual ZIRP machine with these "policy statements".  We all know that Chairman Bernanke doesn't want to burst the stock market bubble with any hint at "tapering" in the near future. Look what occurred earlier in July when he mentioned the word. The markets had a hiccup and Bernanke dispatched his team to calm the markets. You can bet he won't do that again. If one doesn't want to put their funds at risk in the equity or bond markets for the "foreseeable future" just get used to the status quo. I plan on it for the portion of my portfolio's 'safe money' through at least year 2019.
Anonymous   |     |   Comment #6
Bernanke and company has got this country into this mess, now he doesn't know what to do without creating chaos.
cumulus   |     |   Comment #7
Ken, thanks so much for your always
excellent summary of FOMC activities.
mustsavemore   |     |   Comment #8
So basically we need to spend more to make more. Sounds like a plan to me. I'll start spending immediately and see how it goes.
Anonymous   |     |   Comment #9
Bernanke suffers from Munchausen by proxy syndrome, which means he treat the economy with wrong medicine just to make it dependent on the FEDs forever.

He does not like good news on any economic field and if such news shows up he will suppress it as faulty and temporary.
I have been following him from day one and concluded his syndrome 3 years ago by listening and analyzing his next moves from his previous intends.
Shorebreak   |     |   Comment #10
Re: Anonymous - #9,Wednesday, July 31, 2013 - 9:37 PM

Well done. Excellent analysis.
Anonymous   |     |   Comment #11
And then, we have to pay taxes on the meager interest rates.  INSULT TO INJURY !!!!!!!!!!!!!!!!!!!!!!
Anonymous   |     |   Comment #12
We all sound like a bunch of back seat drivers, who evidently were not ever qualified to take over the realm. We all seem to complain that WE are not getting enough interest on our savings. At least we have savings. What about our children who may not have jobs or who are underemployed and cannot make ends meet. What is the matter with this scenario?  Sometimes we sound like greedy bunch.  
Anonymous   |     |   Comment #13
Don't worry about your children, #12.  Our government will take care of them.  SOCIALISM!  That's where our country is destined.

You call us who want higher interest rates on our savings  a GREEDY BUNCH?  Well, if we do not get higher interest rates on our savings to live on, we will eat away at the principal and have NOTHING LEFT to LEAVE to OUR CHILDREN.  Now who's looking out for our children more?
Anonymous   |     |   Comment #14
#13 I guess I also look at things differently. Average SS pays about the same as a minimum wage job that our children may be receiving. If we are fortunate enough to still have a spouse then we have the income of 2 minimum wage jobs with no work expenses. We complain, but our children may have rent, maybe a spouse and children to support. We, retirees, at this stage should have made some good choices and either downsized, or chose to sell our homes used that money for rent. We sold our home in 2010 during the housing crisis. We had 22 showings in 14 days and 4 cash offers. My children said I listed it too low. I knew I needed to get rid of it because we would not  be able to afford it in our later years. Our children now have nothing to fall back on. They need help NOW not down the road. Once in a hole it is almost impossible to get out. We have our SS to live on and should be able to manage. If we have enough to pay for internet we are not wanting. This demonstrates we have enough for extras. I guess I don't worry about leaving my children an inheritance as much as I worry about their well being NOW. Our generation worked through years of high interest rates on savings. But I remember working in junior high and high school and we had 1% on our savings at the local savings and loan and I remember in the 50's getting nothing on my Christmas club when I walked a mile and 1/2 every Saturday (even in the snow) to put my 25¢ in that account. I have always been a saver but  do not even remember hearing about CD's until the 70's.  Our parents or grandparents did not have SS indexed to inflation like we have. With Ken's site and the internet we have the ability to help ourselves. We have many tools that was not afforded our grandparents did not have SS indexed to inflation and our parents did not have COL increases until the 70's.

People see things differently and I do see a bunch of cry babies. We have more opportunities than our parents and we still want more. Most of us while working had health insurance to get us through car accidents, tonsil operations, broken bones etc. Many of those working today are not able afforded insurance from their employer. We have Medicare now and can even buy a supplement and it would be still cheaper than what our children would have to pay with the same income. 
Anonymous   |     |   Comment #15
GREEDY.  I retired with no pension only 15K in Social Security and $1.5 million in CDs hoping to withdraw interest of 4% ($60K per year). 

Instead I get to withdraw $15K per year, giving me a $30K income.  That only covers rent and health insurance.  Is it greedy to also want to be able to afford food, gas, clothes, charitable giving, etc.

Not even an acknowledgement from the Fed as to the pain they are causing us.  We are the only group not recieving some type of compensation and we are the least guilty of the people who caused the crisis.

Anonymous   |     |   Comment #16
 1.5 million in CD's will last 30 years with no interest with withdrawals of $50,000 a year.

PS I have live on $25,000 since 1995. It is possible. I have fresh fruit and salad everyday and have everything I need. 
Anonymous   |     |   Comment #17
#16 You've arrived
Anonymous   |     |   Comment #18
#17 We save all our lives for retirement. In our retirement we should spend it or use it for the kids or do with it what makes us happy. Why did we save it? To expect to live off interest is not why I saved.  I think we forget that retirement is not for accumulating.  I choose to live cheaply and give my extra to the kids.  When my husband died I disclaimed hiis IRA's and the co beneficiaries, the children, also did it with his annuity. I have my own IRA's and know how to live cheaply and still have everything I could want or possibly need. 
Anonymous   |     |   Comment #19
#16      1.5 million would be OK if it were just me at age 65, however, my wife is 50, I am not about to spend it down so she will have to go to work at age 80, but thanks for the advice.  
dave9354   |     |   Comment #20
I think it is time to help the senior citizens of this country. How about not taxing our interest on savings for citizens over age 62?? It would help a great deal.
paoli2   |     |   Comment #21
If's there's one thing I got out of reading these postes that makes me happy is that we do have lots of posters, like myself, who admit they saved with a purpose to help their children if the need arose.  My time for saving is over and whatever savings I am fortunate to have brings me great peace of mine that I can help my children survive this new society and what their futures may be.  What good parent would not feel this way.  Any decent interest rates I may strive to find are so I can keep as much principal intact as I can so I won't run "out" of money and can still be there for those I love. 

#20:  I think it would be great if we didn't have to pay taxes on our interest income even if it is much lower now than years ago.  Mainly because it would make our total income less and we could pay less taxes on Social Security.  I just don't think our government is that concerned about seniors to make such a change especially with the country in such bad financial shape.
Anonymous   |     |   Comment #22
The seniors need tax relief from taxing SS, interest, and RMD.
paoli2   |     |   Comment #23
#22   You can never get tax relief for the RMD.  It's the way the government gets back taxes on the money we saved tax free.  I would love to see some help on the taxation of social security benefits but I don't think that will ever be a reality either.  The more RMD you have to withdraw the more it will impact how much SS you have to pay taxes on.

Anonymous   |     |   Comment #24
Seniors are the new Soylent Green.
Shorebreak   |     |   Comment #25
The Fed has shifted it's focus away from employment to more on inflation. The new excuse to maintain ZIRP and QE is that inflation is too low. Unless inflation goes up to the Fed's target of 2% the current policies will remain in place. Of course the CPI figures are pretty much bogus to begin with so don't expect any policy changes down the pike. More record highs for the stock markets are in the offing as the pattern of easy money continues.  Risk is in, safety is out. Note: Take a gander at the latest yields on tax-free municipal bonds. The longer term yields are pretty good and that's tax-free remember.

Roush   |     |   Comment #26
Well, since The Petition didn't work out the first time around, maybe The Petition II might work this time. So, where is the petition waving poster who was so vocal about it a short while back...we need you and you may have been right all along!  Ah, those were the days.
paoli2   |     |   Comment #27
#26:  If you want a Petition 11, the person you need to speak to is Ken.  The Petition written by a person who is not a member of our group may not be suitable for what is needed now so someone would need to write up a new Petition and get Ken's permission to post it from here.  That person is no longer me.  I was glad to do it the first time but not getting enough backing or sigs from this group and then having to be called rude names and mocked for doing it is nothing I am willing to take on again.  You may have been one of the ones who did sign the first Petition and I thank you if you did.  I, of course, would be willing to sign another but I just don't think it will get enough signatures again.  My main intention with the first Petition was to at least let Washington know that we were "voicing" our anger and concerns with the Petition. 

Now that Ken and Deposits Online has more media publicity, I think it could be a great help if those magazines were mentioning that his group was voicing what is happening to seniors financially with a Petition to Washington.   Others need to know that our group is not just sitting back and letting this happen without doing "something".   Every concern and issue needs a leader but every leader needs others to back them up.  One soldier cannot win a War.  He can fight it and give his life for it but without his troops backing him, he cannot be expected to win it alone.  Ken tried with the first Petition but whether he would be willing to do it again without some assurance this group which he has given so much to will back him, is something I can't determine. 

Thanks Rousch, for caring.
Roush   |     |   Comment #28
Sad to say, but I guess our only hope to voice our situation is either AARP or a Petition, neither of which is likely to make one whit of a difference. AARP, of course, _could_ make a huge difference but they are to busy selling car rentals, insurance, vacations, etc. to help defray the costs of their substantial executive salaries. If any articles are to be written, then they should include a section as to how AARP has completely let the seniors down when it comes to things that really matter.  
Anonymous   |     |   Comment #29
While on the subject about AARP letting the seniors down, did anyone besides me notice all the articles written about Holly Wood "celebrities" in AARP monthly duplications?  Like they really need or even care about higher interest rates on savings and cost of living expenses.
paoli2   |     |   Comment #30
I would like you to know that we cancelled our membership to AARP because of the same reasons you gave.  I wrote to their corporate office and their magazine asking for some promotion on the last Petition and they just ignored my letters.  So they showed their true colors to me and we cancelled.  I was hoping some of the posts against them were not true but it seems they were.  They are all about making money, for "themselves".
Anonymous   |     |   Comment #31

Yes you can get tax relief for RMD! It's called Roth conversions in lower tax brackets, prior to taking social security. But it requires good planning and a good understanding of everything.
Anonymous   |     |   Comment #33
#31  I know.  I have a relative who was a tax accountant and tried to get me to do the Roth IRA but I didn't really want to check into it at the time so just ignored it.  I think I am paying for not listening to him now. 
Anonymous   |     |   Comment #32

Yes, risk is in and safety is out.

Remember, safety has big risks too! And that's PURCHASING POWER RISK! Another reason why its good to have a diversified portifolio. Nothing wrong with having a small slice to stocks. 100% savings accounts is a bad idea IMO.
Shorebreak   |     |   Comment #34
Re: Anonymous - #32,Friday, August 2, 2013 - 5:44 PM

I refer you to my post #5 regarding portfolio diversification. Your exclamation points and CAPS are aimed at the wrong person.
Wanderer   |     |   Comment #35
Ken, "savers" are going to be waiting forever, or until the day they die, whichever comes first. Over the next 30 years, the government will continue to financially repress Americans. Interest rates will continue to be far less than inflation. Rates will only be allowed to rise quickly if and when the currency is collapsing.

It won't matter how much your interest rate is if it is a negative rate. Suppose, for example, that banks begin offering 56% on 10 year time deposits, but the inflation rate is 76% per year.  That translates to a loss of 20% of your money each year, in terms of buying power value. More likely, when the real inflation rate arrives at 17%, the government will report it at, perhaps, 5.6%. Assuming that government statisticians continue to falsely the official CPI at about the current rate, in that scenario, you will get a 10 year CD rate of, maybe, 7% for a net real loss, each year, of 10%.

Accordingly, nominal rates may rise significantly, at some future point in time, whereas real rates of interest will continue to be heavily negative.
Wanderer   |     |   Comment #37
Shorebreak, short-term CDs only kept ahead of inflation in the years mentioned, if you believe that the government is telling the truth when it reports the inflation rate. But, the CPI formula is gamed, and has been gamed since 1982, getting progressively more non-representative of true inflation. BLS even includes some obviously fraudulent methods to come to the final so-called "CPI".These include "hedonic adjustment" and "product substitution".

In hedonic adjustment, the price of a good or service is reduced statistically, based upon the subjective assessment that an "improved product" was created over a given time period. For example, let's say that the Chevrolet Impala is inside the government's CPI basket of goods in 2012. It's price rises by 6%, but the statisticians determine, as they please, that some new type of vinyl used on seat covers, a different refrigerant in the air conditioner is worth 7%, and a somewhat different engine design means the car is 7% "improved". The Bureau of Labor Statistics deducts 7% from the out-of-pocket cost of the car, resulting in a report in which the Impala has "fallen in price" a net 1%. 

"Product substitution" means that, when a product rises in price, the government takes it out of the basket of goods measured, or reduces its weight. For example, let's say filet mignon is a part of the 2012 CPI basket, and it rises by 50% between 2012 and 2013. Government statisticians draw a statistical conclusion that, as a result of the price increase, Americans are going to eat less filet mignon and more chopped beef. So, the weight representing the cost of filet mignon, in the basket, is reduced, and the cost of chopped meat is substituted in, artificially reducing the reported rate of inflation. Obviously, the real reason people would not be eating filet mignon is because they can no longer afford to do so, and removing it from the basket is a fraud.

If you calculate the current CPI, using the 1981 government formula, prior to the tricks and sleight of hand, our current true CPI is running at nearly 9% per annum. If you recalculate backward all the prior years where this fakery has been applied, and normalize it to a reality assessment of inflation, you will find that Americans were being financially repressed even before the start of permanent open market transactions (a/k/a "QE" or money printing).

Adjusted for taxes paid on interest, people have been losing money on their savings for many years, but they just didn't notice it because the losses were comparatively small. Now, the losses have become very large, and that's why people are beginning to notice. Buying CDs is not and never has been an effective method of keeping ahead of inflation, except for very short periods of time (early 1980s, and the turn of the 21st century).

I think that you can and should keep some of your money in cash instruments, but, an allocation should be in the precious metals or PM stocks. In addition, although the current general stock market is certainly not worth buying, as it is dramatically overpriced, and will never keep up with inflation, a big crash is quite likely. Savers should wait for this crash, watch until prices dip deep enough to level off to a plateau, and then buy high dividend paying blue chips.
Anonymous   |     |   Comment #38
Wanderer:  You can quote all the statistics you can find but I am not losing money unless I run out of enough money to pay for the things I need.  Haven't you ever heard of "sales".  There is no inflation as long as you don't buy retail.  Inflation causes products to cost more so all you have to do is wait for them to go on sale which they always do and buy them then.  I don't believe in "inflation" and all this stuff you are spouting.  All I believe in is making sure I find a way to always have enough money to pay my bills and buy what we need for "cash".  If you lived your life that way, you would not have to spend your time reading all those statistics and trying to convince others the sky is falling.  It already fell and if you played your cards right earlier, you should not have to care about inflation and all those useless numbers you are quoting.   Who cares about filet mignon anyway.  I have never made filet mignon meatballs and don't care if I ever do.  Good ole ground beef does well by me.  Less meat is healthier any way.
Wanderer   |     |   Comment #39
#38, good thing you don't like Filet Mignon. It leaves more for me and I do like it, as well as sirloin, porterhouse, etc. I am NOT a big chopped meat fan, and I am sure that the cost of ground beef will be way up also, when the other cuts rise.

But, actually, filet mignon was a mere example. Nothing more. The same thing applies not only to sirloin, porterhouse, etc., but to everything you buy, whether it be meat, computers or cars.

Of course I like a good sale. Everyone does. But, when the normal price for a donut rises to $4.00 per donut, the "sale" price might be $2.50, which is plenty expensive! And, actually, if you compare Dunkin Donut prices 10 years ago, to the prices today, you will get a rather accurate assay of the true inflation rate for the past 10 years.

Inflation is very important, but, if you enjoy losing buying power, be my guest. Some of us do not enjoy losing buying power. But, somebody is going to lose big over the next decade, just as was the case in the 1970s, but on steroids. The politicians in government have made huge promises that cannot possibly be kept, and will not keep, and a runaway debt catastrophe is in the making.

But, thank heaven for folks like you. Without those willing to lose, the best planners among us would not be able to win. It is fair play to warn you. In 5 - 10 years, don't start complaining. Search for your "sale" prices. You will to need them desperately.
paoli2   |     |   Comment #40
#39 "  But, thank heaven for folks like you."

It's about time I was appreciated.  However, I didn't expect you to say it on the worldwide internet.  Maybe one day I can say the same about you but not today until you agree to pay for all that expensive meat you think I should eat.  When hard times really hit you may not be able to afford your Filets whatever but I will always be able to find some kind of cheap meat to get ground and make my meatballs.  THAT makes me a happy camper. :)