The Fed Opens Door to Rate Cuts - Rate Predictions & CD Strategies

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The Fed decided to hold steady on rates, but it did make an important change to the FOMC statement which opens the door to future rate cuts. The Fed removed the “patient” sentence and replaced it with the sentence that states the Fed “will act as appropriate.” The following are excerpts of today’s statement and May’s statement that shows what replaced the “patient” sentence:

May 1 FOMC Statement excerpt:

In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.

June 19 FOMC Statement excerpt:

In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

Not all FOMC voting members agreed to hold steady on rates. According to the statement:

Voting against the action was James Bullard, who preferred at this meeting to lower the target range for the federal funds rate by 25 basis points.

This was the first time that there was not a unanimous decision since 2017.

In addition to the statement, the Fed released an updated summary of economic projections (SEP). In the first table of this summary, you can see the Fed’s economic projections for future years and how they compare to the Fed’s March projections. For GDP and the unemployment rate, there were no forecast downgrades. There was a slight increase in the 2020 GDP forecast and slight reductions to the forecast unemployment rates for 2019 through 2021. With forecasts like this, you can see why the Fed decided to hold rates steady at this meeting.

The largest change from March in the economic projections was in the PCE inflation forecasts. There were large cuts in the forecast for 2019 and small cuts in 2020 for both PCE inflation and Core PCE inflation. Low inflation forecasts will make it easier for the Fed to cut rates in the future.

Fed’s Dot Plot

At the bottom of this first table, the forecast most interesting to savers is the projected federal funds rate. The median projected federal funds rate for 2019 did not go down from March. The majority of the Fed do not think there will be a rate cut in 2019. However, the median projected federal funds rate for 2020 did go down from March, falling 50 bps. In March, the majority of the Fed anticipated one rate hike. Now the majority is anticipating one rate cut in 2020.

The most significant thing to note in the dot plot is the number of participants who are now anticipating rate cuts. In March, no participant anticipated rate cuts in 2019. Now there are eight participants anticipating one or more rate cuts in 2019. Eight other participants are anticipating no change in rates, and one is anticipating one rate hike. This resulted in the median remaining at “no rate change.” If one additional participant had moved to the rate cut group, the median would have gone down.

Press Conference

Fed Chair Jerome Powell’s press conference reinforced the Fed’s move toward a future rate cut. The Fed Chair said that the “case for accommodation has strengthened.” When asked why the Fed didn’t cut rates today, the Fed Chair said that “it would be better to see more [data] before moving.”

I think there is still a reasonable chance that the Fed will again hold rates steady at its July meeting. For that to occur, we’ll need to see strong economic data such as a strong June jobs report that will be released on July 5th.

Federal Funds Rate Futures

The Fed Chair may be saying it will depend on the data, but the markets think the signals are clear: a July rate cut is a sure thing. That’s according to the federal funds rate futures as shown by the CME FedWatch Tool. The futures are showing odds of a rate cut at the July meeting of 100% (69.8% chance of a 25-bps rate cut and 30.2% chance of a 50-bps rate cut).

The futures are showing odds of 67.4% that the federal funds rate will be at least 75 bps lower by the December meeting. After the March Fed meeting, the futures were showing odds of 35.5% of just one rate cut by December. That went up to 52% after the May Fed meeting. Now the odds are 100% of at least one rate cut by December.

Future FOMC Meetings

The next three FOMC meetings are scheduled for July 30-31, September 17-18, and October 29-30. The September meeting will include the summary of economic projections. All meetings now include a press conference by the Fed Chair.

What Savers Should Expect in 2019

Online Savings Account Rates

The target range of the federal funds rate is 2.25% to 2.50%. This is the upper range of the current online savings account rates. The well-established internet banks like Ally and American Express have online savings account rates just below this range while the newer internet banks that are being more aggressive have rates that are at the top of this range. These internet banks include Rising Bank, WebBank, Vio Bank and Comenity Direct.

I’m afraid it looks very likely that the Fed will soon be cutting rates. Once the Fed starts to cut the federal funds target rate, it will only be a matter of time that we will see cuts to the rates of online savings accounts. To estimate how quickly rates will fall, I reviewed my weekly summary data from 2007, when the Fed last transitioned from a pause to a rate cutting phase.

The last Fed rate cycle began on June 30, 2004 when the Fed began a long series of rate hikes. The last of these rate hikes took place on June 29, 2006 when the federal funds target rate reached 5.25%. The federal funds target rate remained at 5.25% until September 18, 2007. On that date, the Fed cut the rate by 50 bps to 4.75%. The Fed continued to make cuts until the federal funds target rate reached a bottom, a range of 0% to 0.25%, on December 16, 2008.

I looked at how savings and money market rates declined after the first Fed rate cut on September 18, 2007. Using my 2007 weekly summary data, I tracked the average yields of 20 rate-leading online savings and money market accounts before and after that first rate cut. Just before the Fed rate cut, the average of those 20 savings and money market accounts was 5.24% APY. By the end of October 2007, the average had fallen 25 bps to 4.99% APY, and 16 out of the 20 accounts had rate cuts.

In summary, when the Fed starts cutting rates, online savings account rates will certainly fall. There will be some lag, but as history shows, expect cuts within a month or two after the Fed rate cut.

CD Rates

As we have seen in 2019, CD rates can fall even when the Fed is holding rates steady. One thing that tends to lead CD rate changes is changes in Treasury yields, and Treasury yields have been on the decline since November. On November 8, 2018, the 10-year and 5-year Treasury yields were 3.24% and 3.09%, respectively. After the last Fed meeting on May 1st, the 10-year and 5-year Treasury yields were 2.52% and 2.31%, respectively. Now, the yields are much lower at 2.03% and 1.77%. In less than eight months, the 10-year yield fell 121 bps and the 5-year yield fell 132 bps.

Brokered CD rates are the first deposit products that respond to Treasury yield changes. Like the Treasury yields, brokered CD rates have plummeted since November. The top 5-year brokered CD rate was 3.60% last November. As of last Tuesday, it’s down to 2.50%. That’s a fall of 110 bps.

Direct CD rates from online banks and credit unions haven’t fallen as much as Treasury yields and brokered CD rates, but we have started to see an increasing number of rate cuts, and the size of the rate cuts have been growing. Based on today’s Fed meeting and its removal of the “patient” language, CD rate cuts will almost certainly accelerate.

Deposit Account Strategies

Since we are likely at the rate cycle peak, I think it makes sense to look at long-term CDs. Many savers avoided these in 2018 as rates were rising. It’s no longer the time to avoid them. If you had suspended your CD ladders by not re-investing maturing CDs into new long-term CDs, it’s time to continue with your CD ladders by investing those funds back in long-term CDs.

You can still get 3% yields on today’s mid-term and long-term CDs at a few online banks and credit unions, but they’re becoming harder to find. I wouldn’t be surprised if they become rare before the end of July.

If you are worried about locking money into long-term CDs, look for 5-year CDs with early withdrawal penalties (EWP) of no more than six months of interest. A few online banks that have competitive 5-year CDs with EWPs like this include Ally Bank, Barclays, PurePoint Financial, Colorado Federal Savings Bank and Citizens Access. To see how the EWP affects the yield when you close a CD early, please refer to our CD Early Withdrawal Penalty Calculator.

Add-On CDs

If you have CDs that won’t be maturing until later this year or next year, consider add-on CDs with long terms. Open the add-on CD now and you will lock in today’s CD rate until the CD matures. If rates fall by the time your current CDs mature, you can fall back on that add-on CD by making additional deposits into the add-on CD. Those additional funds will then begin earning that same CD rate that was set when the add-on CD was opened.

One noteworthy 5-year CD that continues to be available is the 60-month Promo Jumbo CD at GTE Financial Credit Union which earns 3.30% APY for a $100k minimum deposit. What makes this especially noteworthy is that it allows unlimited add-on deposits. There’s also a non-Jumbo version with a lower rate (3.04% APY). Its minimum deposit is only $500.

The other add-on deposit 5-year CD that’s nationally available is the 5-year Growth Certificates at Mountain America Credit Union (MACU). Unfortunately, the rate has recently fallen from 3.10% APY to 2.95% APY. In late 2018, this rate had been as high as 3.51% APY. There’s only a $5 minimum initial deposit. The main downside to this add-on CD is a maximum balance of $100k (in any one or combination of Growth Certificate accounts). MACU allows members to add money to their Growth Certificates at anytime. The account also requires an automated monthly deposit of at least $10.

The new internet bank, Rising Bank, offers two add-on CDs. These are called Rising CDs, and they have terms of 18 months and 3 years. For add-on CDs, the longer term ones are best for hedging bets on interest rates. The 3-year Rising CD currently has a 2.80% 2.87% APY. Unfortunately, it has a high minimum deposit requirement of $25k. There’s a maximum balance of $500k, which is an important limitation to note. Another important limitation is that you are allowed to make no more than two additional deposits during the term of the 3-year Rising CD, and each deposit must be a minimum of $5k. [Update 6/20/19: Rising Bank's 3-year Rising CD APY fell 7 bps today.]

The 3-year Rising CD also provides two options to increase the rate if the 3-year Rising CD rate should happen to rise. I don’t consider that an important feature, especially in our current environment. It’s not clear in the CD disclosure, but I’ve been told by a Rising Bank official that this rising rate feature is completely independent from the add-on feature. In other words, you can exercise the add-on feature without the interest-rate feature. So if the CD rate falls, you don’t have to worry about your CD rate falling when you make the add-on deposit.

The above rates are accurate as of 6/19/2019.


Comments
anonymous
anonymous   |     |   Comment #1
Thanks Ken, I appreciate the description how the median fed funds rate in the forecast hinged on the forecast of just a single participant. Because, comparing the dot plot to the March dot plot, it's quite obvious that the majority of participants changed their mind and lowered their fed funds projections for 2019:

https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20190320.pdf
https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20190619.pdf

Maybe it would be useful if the Fed would also calculate the mean projection (in addition to the median projection). Mean 2019 projection after the March meeting was 2.49%. The mean 2019 projection after the June meeting was 2.17%. (Someone please check my math.) That's a 0.32% change, a little more than one rate cut actually. 7 out of 17 participants are expecting two rate cuts ...
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Never Trump Republican
Never Trump Republican   |     |   Comment #2
Hmm .. Sounds like "Make Rates Zero Again"   !
Never Trump Republican
Never Trump Republican   |     |   Comment #3
Alternative one might say "Make Savers Suffer Again" ... No?
Robb
Robb   |     |   Comment #5
NTR unfortunately not one question in the post Fed conference yet again was about the plight of savers and focused mostly on how low inflation is and what can they do to get it higher...it's almost as if the questions are all vetted in advance. Thanks to Ken's help we've had adequate time to position in a couple of add-on CD's which should help out in terms of rate insurance for the next 3-5 years ahead should rates continue to tank. The trend globally has not been positive for savers.
ZIRP
ZIRP   |     |   Comment #6
https://www.cnbc.com/2019/06/19/trumps-potential-fed-nominee-reportedly-wants-rates-at-zero.html
Never Trump Republican
Never Trump Republican   |     |   Comment #13
#6 : Well ... well ... just read the URL you've given and got the gist ...

Article is on: CNBC,
Date of article is 06, 19, 2019
The headline is: "Trump's Potential FED Nominee Reportedly Wants Rates At Zero

... Right ... I'd guess that translates to "Make Savers Suffer Again".
Sam
Sam   |     |   Comment #17
#13, you can not have it both ways, either the $22 trillion debt will be defaulted or be serviced properly, chose a side.
If we default on the national debt, your savings will be nullified because you hold debt notes as money and not real dollars.
kcfield
kcfield   |     |   Comment #42
Sam: Any thoughts about why the massive federal debt does not seem to be a factor in the Fed's interest rate decisions? It appears to be an irrelevant issue in their sight.
Bore
Bore   |     |   Comment #22
Never Trump Republican, the Trump is working for us to save the dollar and your assets and the only way to do it at this time, it is to lower the interest rates, otherwise, defaulting on the national debt will be a disastrous for everyone.
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Mak
Mak   |     |   Comment #29
#26.... you only got 0% if you were in short term products such as money markets, checking accounts and share accounts.... come on you can do better than this...:)
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Mak
Mak   |     |   Comment #39
To be fair the unemployment rate was 9.9% in 2009 Obama's first year.... when Obama left office and Trump took over the unemployment rate was 4.7%
Mak
Mak   |     |   Comment #40
The stock market was crashing, doesn't seem to be the case now, does it?
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Mak
Mak   |     |   Comment #50
Never said it was a continuation, I said there was a reason for the zero rates.... you act like Obama set those rates.
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Never Trump Republican
Never Trump Republican   |     |   Comment #35
#6: Here is another URL ...

https://www.cnbc.com/2019/06/20/the-trump-economy-is-starting-to-look-more-and-more-like-the-obama-economy.html

N'uff said !!
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Never Trump Republican
Never Trump Republican   |     |   Comment #48
#46: Sure sure ... Any news that does not favor Donald, in your dictionary, is fake news ... I know !!

How about the analysis presented by Ken here that hints at rates going down, and his suggestion about how to mitigate the risk by using Add-On CDs? ... More fake news?
Mayor Pete
Mayor Pete   |     |   Comment #54
Talk about fake news. Trump promised 4% GDP growth (and hinted at 5%-6%). He's never even had a 3% year. Last year was 2.9%, the same as in 2015 under Obama. The Fed expects it to go down. The stock market did far better in Obama's first 2-1/2 years (granted, it's not a completely fair comparison). Obama said SOME manufacturing jobs would never come back, which is obviously true and only controversial to people pushing a false narrative.
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Anonymously
Anonymously   |     |   Comment #15
Rates were near zero, but there was also a great recession.
dollarsncents
dollarsncents   |     |   Comment #16
@ #3, No!

Read all the comments on threads here where "savers" have locked in 4% CDs, add on CDs, etc. So where's the suffering?

By the way, I have been a "saver" all my life and am now well into retirement and have never "suffered" financially.
Verblick
Verblick   |     |   Comment #20
if you are well into retirement then for most of your life cash paid 5-10%, and the value of your home and stocks skyrocketed recently as rates were cut: all that is over now
milty
milty   |     |   Comment #7
. . . and will act as appropriate to sustain the expansion . . . . Such wasted subtlety, but I suppose after all we are now living in the Game of Markets.
Mak
Mak   |     |   Comment #8
Bond market speaks....1.98% 10 year tonight
willy12
willy12   |     |   Comment #9
The lower rates go the more likely I am to avoid long term CDs and try to put my money to work in index funds of some kind.
trader531002
trader531002   |     |   Comment #14
Nothing wrong with that approach Willy.. Depending on your age and how much risk you want to take on. Someone nearing retirement has to play it differently depending on how much cash they might have. I think something much bigger is looming out there for them to be so skittish.

Donnie D
Sam
Sam   |     |   Comment #18
trader531002, wrong advice, you said: "depending on how much cash they might have", it is irrelevant the size, what counts is the liquidity to live on. I know persons invested in not liquid accounts and live of the credit cards and paying interest on it and struggle to survive with million dollars in ETFs that are down 20%+ and long term CDs that pay less than today's rates.
dollarsncents
dollarsncents   |     |   Comment #19
Sam, your example of persons in that predicament is a direct result of poor financial planning on their part.
Bore
Bore   |     |   Comment #21
dollarsncents, you'll be surprise how many people are suckered in investments that do not produce income, the so called "expert" advisors are there for their own interest and commissions and not the well being of the clients.
trader531002
trader531002   |     |   Comment #69
Well put dollar, what I should have said is how much cash you have to lose like money you won't need to live on. I do not trust the stock market.

D
Rick
Rick   |     |   Comment #23
Just opened (6) CD's with maturities of 18 month to 60 month with APY's range from 2.27 to 3.03 - $500 min each which they can pull put of your credit card / and unlimited add on's of $20 entire life of CD. They also allow advance direction instructions to deposit cd proceeds into saving acct. Account was opened and all CD's funded in 4 hours/Cust. Service spent time over the phone answering all additional questions I had and very professional...considering rates are headed down using GTE might be a good strategy for any cd's maturing in the next few years.I like the add on feature !
Mak
Mak   |     |   Comment #24
Rick...What does that mean, unlimited add on's of $20 for entire life of cd?
???
???   |     |   Comment #25
the minimum deposit of $20 to CD
Mak
Mak   |     |   Comment #31
#25.. I opened one a week ago and when I saw the $20 I thought I missed something...
Rick
Rick   |     |   Comment #27
yes minimum unlimited deposits of at least $20 ....these are promotional CD's that can end anytime.Usual CD offering at GTE do not allow additional deposits. i sent in online application in at 4 am and account was established in 5 hours with CD's opened..
anonymous
anonymous   |     |   Comment #28
Thank you, Rick. I have a question, because my experiences with GTE are quite different. When I've opened CDs online, I have not seen an option for funds to go into the savings account at maturity. And I've had several phone conversations and online chats where I've been told that I cannot arrange for funds to be transferred into savings, until shortly before maturity. How were you able to arrange this?

Also, and this is a recent problem, I've been getting incorrect disclosure statements from GTE re the promotional CDS, with unlimited add-ons. They've been sending their disclosure form for standard CDs (which provided for limited add-on deposits) and listing the rate and yield as 0.00%. Everything is correct when I check my accounts on their website, but I've been repeatedly contacting them re incorrect disclosures. I've been told I'm not the only member who's having this problem.
Rick
Rick   |     |   Comment #30
When i enrolled online i selected the promotional CD's (6) which listed terms and APY...i took a screenshot of this for my file. Re: arranging for funds to be transferred into reg. saving account at time of opening CD i pressed the customer service agent to do it...she said they normally don't do it in advance but it can be done/placed on hold 5 minutes and then confirmed directive had been set. 1 hour later i opened 3 more cd's online then called in/spoke to a different cust. rep and told her the directive was done on the other three..she then placed the same directive on the remaining cd's. All in all pretty good service...just make copies/screenshots of everything.
anonymous
anonymous   |     |   Comment #32
Thanks again, Rick. One thing to be aware of with GTE: when I've given instructions (a few weeks before maturity) for them to place the proceeds into the savings account, they generally do it. But I always call a few days before maturity to check -- sometimes the instructions vanished. And one time, they closed the CD the day I called (about 10 days before maturity), but without penalty.

Like you, I have screenshots and printouts of the disclosures that are accurate, but they keep sending incorrect disclosures re my specific accounts. It doesn't really worry me (since things are fine when I log into my account), but I'd prefer they get things right,

I like the credit card funding, which is especially valuable for short-term CDs, and the add-on possibilities, especially valuable for longer-term certificates. But I've had sufficient problems with them re account management that I've drastically reduced the number of accounts I have there.

The customer service representatives are pleasant, but there's an incredible of range of competence -- from totally clueless to quite good. At most credit unions, I've found a narrower range -- representatives tend to be clueless to mediocre, _or_ generally decent to excellent. GTE is all over the map, in my experience.
Rick
Rick   |     |   Comment #33
#32 i am using the 3/5 yr cd's for insurance in case rates hit the floor in 3 years because of the add on feature...i will have time to judge how professional GTE as i go along. If unhappy i will liquidate my minimums as CD's mature. If GTE performs well and in 3 years i need to add a significant amount of assets into the 5 year and grab 3% for the remaining two years of the term i will. Not much risk here but upside if rates take a dive.
rqkjn55
rqkjn55   |     |   Comment #63
How does one obtain the promo CD disclosure statements from GTE. I've opened a promo CD but cannot find any link for the disclosures?????
Rick
Rick   |     |   Comment #67
# 63 ...the disclosure agreement is listed on the bottom page of the GTE website...disclosure for all accounts including CD...and it also states minimun $20 allowed length of CD term for all PROMO cd's
trader531002
trader531002   |     |   Comment #68
Gentleman,
When you call gte dial ext. 40453 ask for Juliana she runs the secondary dept. and will clear up all questions about the cd. I just opened the jumbo 3.3 with a five year add on and got the wrong disclosure, called and she sent me the corrected one. 20 dollar min. on additional money with no limit. I think this is great insurance for those who do not want to participate in the Feds stock market.

Donnie D
Anon
Anon   |     |   Comment #74
I have also been opening some GTE Add-On certificates, and the information that I have been given regarding opening the Jumbo CDs is all over the map. Very frustrating! I also ended up having to correspond with Juliana in order to get real instructions. But, a 3.3% APY Add-On certificate at this time is my insurance policy against rates going down in the next 8 months. We are at the end of our Tobyhanna 7-year CDs, and I just don't think the rates will be the same early next year. Hopefully, they are, but if not we are now covered for another 5 years! :) Thank you, Ken! (again!)
trader531002
trader531002   |     |   Comment #77
anon what was tobyhanna offering on the 7 yr......
deplorable 1
deplorable 1   |     |   Comment #36
This is crazy that we are talking about the FED cutting rates. The stock market just hit another high today and oil just jumped over $3. Unemployment is at a 50 year low at 3.6%. A good case could be made for a rate hike or at the very least to stay on hold but here we are talking about cuts. The low inflation numbers are being manipulated so I'm not buying that argument. The only reason I could see for a cut would be to combat the low rates in Europe and even then it should be one .25% cut and done.
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Kirkland
Kirkland   |     |   Comment #38
look at commodity prices going up, that is inflation, fed is not going to cut rates
Go Navy
Go Navy   |     |   Comment #41
Recent oil prices jumping is because of the recent turmoil in the Middle East, and the shooting down of our drone by Iran.

Why are all the regulars here so concerned about what the Fed does, or doesn't do? You all claim to be locked into long CD's earning 4% or so. Or maybe you have a CD maturing every month?
57Chev
57Chev   |     |   Comment #44
It’s all related to the 2020 election and to keep the market/economy so re-election happens... it has to be because the fed never changes course so suddenly ... unless there is a political agenda to do so. Oh I forgot the fed is never political isn’t it?
Never Trump Republican
Never Trump Republican   |     |   Comment #49
#36: ... Right ...I agree ... This is crazy that we are talking about the FED cutting rates ...

Wait wait ... but who started this crazy talk? Was it not the occupier of White House?
deplorable 1
deplorable 1   |     |   Comment #51
Right NTR and like I said before I totally disagree with Trump on this issue of bashing the FED and wanting rate cuts into a good economy. I think his problem with rates has more to do with Europe and trade than with Powell and our FED. I can support the president and still disagree with him on certain issues. I would also like him to come up with a plan to reduce the debt so far I have heard nothing from anyone on either side of the aisle about that. Bernie would triple it overnight.
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Att
Att   |     |   Comment #70
D1 Federal Reserve Bank of Minneapolis President Neel Kashkari said the Fed should cut its benchmark rate by a half-percentage point at the U.S. central bank’s policy meeting this week.

Those that took advantage of 4% CDs and add ons did well last year and early this year. Those hoping for 5% and holding off not so.

Connexus had 4% and some CUs and banks has add ons paying on the most to upper 3%. MACU is an example.

As always we have to be alert for those rare great rate offers with no or a few warts.
trader531002
trader531002   |     |   Comment #79
My 2 cents on the fed is I hope he is jawboning like Greenspan did for 20 years. Powell was so gung ho on raising rates all last year that it spooked the crybabies on wallstreet to a Dec. low. And so far he has done nothing but talk about cutting and the market returns to all time highs. No need to cut unless something else is looming out there.
buckeye61
buckeye61   |     |   Comment #43
After nearly 10 years of a zero percent FED funds rate I was beginning to believe we would never see a "Normalization" of interest rates. When the FED started to raise the overnight rate a couple years ago I had doubts about seeing a significant increase while the global economy was so weak and the federal deficits were so high. So, I guess I'm not surprised by the fact that we are seeing this reversal in policy. Historically, lower interest rates with such low unemployment and a relatively strong domestic economy seems unwarranted, but clearly times have changed. The rest of the world seems to be following Japan's lead.
deplorable 1
deplorable 1   |     |   Comment #47
I never thought we would get back to 5% FED rates this time around(for the reasons you mentioned) but I was figuring on 3% and maybe some 4.5%-5% 5 year CD specials. I have never seen the FED reverse so quickly before and with no recession. I wish Europe would get it's act together so they could raise their rates as that would help us as well. Trump has a lot on his plate but he needs to look at the debt and even Republicans don't want to address it.
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Percussed
Percussed   |     |   Comment #60
Add-on CD's are great in a falling rate environment such as we are currently experiencing. Highly recommended if you can find them and low EWP are always a factor to be considered as well..
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Mean Jean
Mean Jean   |     |   Comment #62
The lower the rates go, the lower my tax bill is. It evens out.

It would be even better if I started spending and enjoying some of that stash. It's no fun just hoarding it. Retirement stinks, unless you get out and have some fun. (I should take my own advice.)
Brokered
Brokered   |     |   Comment #65
I think it's time for many to realize their hunt for CD rates is governed by forces way beyond their control. CD's are at the bottom of the interest chain and the best you can do is pick off a deal from some obscure source. When My last two PenFed CD's mature I'll either buy more brokered CD's OR additional dividend producing stocks. I'm earning a steady 5.6% dividend on utilities and, as a bonus, they've appreciated in price. Not too long ago I sold a few brokered CD's at a small profit to invest in stocks. There's no EWP with brokered CD's which gives me much greater flexibility.
willy12
willy12   |     |   Comment #66
No more brokered CDs for me. They just are not competitive.

And my utilities do not yield 5.6%. More like 4.43 and 4.74%. I own a fund that yields more but its leveraged so more down and upside. (UTF)

I will only buy new CDs at above market rates or I won't buy them.
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Att
Att   |     |   Comment #78
Just had a CD paying around 2.5% mature and put it in my Mountain America CD with the add on feature paying 3.51%. These add on CDs are great especially when it looks like the Fed is going to cut rrates. Still have room to add more when I have another CD mature in August and know that I have a floor rate of 3.51%. This site is great and helps me earn more on my cash investments.
The Fed’s Pause Continues - Rate Predictions & CD Strategies for 2019

As expected, the Fed reaffirmed its “patience” policy by holding steady with the federal funds rate target. The post-meeting statement contained the same patience language that was in previous meeting statements:

One change from the March statement is the description of growth of economic activity. In March, the statement read, “growth of economic activity has slowed from its solid rate in the fourth quarter.” Today’s statement read, “economic activity rose at a solid rate.” This change should reduce the odds of a 2019 Fed rate cut.

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Fed's Pause Has Begun - Rate Predictions & CD Strategies for 2019

There were no surprises yesterday when the Fed made its post-meeting statement. The federal funds rate remained the same, and the same patience language was used to describe the Fed’s future plans:

One thing that did change in the statement from January was the description of the current economic condition. There were clear downgrades in its view of the economy:

In January, the Fed’s statement included these positive views:

Yesterday’s statement changed the above lines to the following:

This policy action was an unanimous decision with no policymaker dissenting.

In addition to the statement,...

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Fed Says It’ll Be Patient on Rates - CD Strategies for 2019

As expected at the FOMC meeting, there were no changes in the federal funds rate. However, key language of the FOMC statement did change which sends a signal that the Fed will likely pause on rate hikes. The following sentence that was in the December FOMC statement is gone:

The above sentence has been replaced in the January FOMC statement by the following:

All voting members voted for today’s policy decision. There were no dissents.

In addition to the change in the FOMC statement, the Fed issued a separate statement on balance...

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Fed Rate Hike! Interest Rate Predictions and CD Strategies for 2019

The Fed defied pressure and hiked rates today. A rate hike was the consensus, but there had been increasing pressure for the Fed to pause. This is the fourth Fed rate hike of 2018 and the ninth rate hike since the Fed started to raise rates in December 2015. Here’s that all important paragraph in today’s FOMC statement:

This policy action was an unanimous decision.

There are signs in both the FOMC statement and in the FOMC projections that future rate hikes will be fewer and more gradual than this year.

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Fed Holds Rates Steady - CD Rate Predictions & Strategies for 2019

As expected, no policy changes were announced today at the end of the two-day FOMC meeting. The Fed decided to hold off on a rate hike. The FOMC statement had nothing to suggest any change to their gradual rate hike policy which means that a December rate hike is very likely.

The economic overview in today’s FOMC statement was very similar to the September statement. There were only two changes. The description of the unemployment rate went from “stayed low” to “declined”. The other change was the “growth of business...

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