The Fed Meets This Week—What It Could Mean for Savings and CD Rates

What to Expect From the Fed’s Next Rate Decision

When the Federal Reserve announces its next interest rate decision this Wednesday, it’s widely expected to leave rates unchanged. If that happens, it would mark the central bank’s first pause after cutting rates at each of its last three meetings.

Those reductions, which came in September, October, and December, lowered the Fed’s benchmark rate by 0.75 percentage points. Since then, policymakers have signaled they want to slow the pace and see how the economy responds before making another adjustment.

Inflation is a key reason for that caution. While price growth has eased considerably from its peak, it remains above the Fed’s long-term target. The most recent Consumer Price Index shows inflation running at 2.7%, still higher than the central bank’s 2% goal, giving officials less urgency to push rates lower.

Unlike the one in December, this meeting will not include one of the Fed’s quarterly forecasts of how the committee sees rates going for the rest of this year. That leaves markets more reliant on economic data and Fed Chair Jerome Powell’s post-meeting remarks. For now, markets see about a 60% odds of a quarter-point rate cut by the Fed’s June meeting, though those forecasts can shift quickly.

Why Savings Rates Often Stay Steady When the Fed Is on Hold

Savings account rates don’t usually react much to Fed pauses. Because banks and credit unions can change savings rates at any time, they often wait for a clear shift in Fed policy before making adjustments.

That’s why high savings yields can linger when the central bank stops cutting rates. After the Fed’s three-quarter-point reductions late last year, APYs on many savings accounts edged lower. But with competition for customer deposits still strong and rate cuts modest so far, the best savings accounts are still paying historically high rates in the 4% range, and even as high as 5%.

For savers, the Fed’s expected pause next week means the top savings yields are unlikely to change meaningfully in the near term. If forecasts pointing to a first cut not arriving until June hold up, today’s top savings account rates could remain relatively steady for months.

Why CD Rates Can Start To Shift Before the Fed Makes a Move

Rates on certificates of deposit (CDs) tend to respond differently than those on savings accounts because CDs lock in rates for months or years at a time. When banks offer CDs, they’re making a bet on where interest rates will be over the life of the account—not just today.

That’s why CD rates often begin to adjust before the Fed actually makes a move. If banks grow more confident that cuts are coming, they may lower CD yields in advance to avoid locking in rates they might later regret—especially on longer-term CDs.

For now, CD rates remain elevated, with some of the best nationwide CDs still offering yields that rival top savings accounts—up to 4.50% APY. But if expectations for future Fed cuts firm up, CD rates are often the first place those shifts start to appear.

For savers considering a CD, timing tends to matter more than it does for a savings account. Locking in a competitive rate sooner can provide certainty, while waiting could mean settling for a lower yield if banks begin adjusting offers ahead of a Fed move.

If the Fed’s pause stretches on longer than markets currently expect, CD rates could remain relatively steady as well. But because the Fed makes each rate decision meeting by meeting—based on the latest inflation, jobs, and economic data—there’s no guarantee current forecasts or CD rates will hold.