The Fed’s New Rate Outlook Has Arrived—Here’s What It Could Mean for Your Savings

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How the Fed’s Rate Cut Will Affect Your Savings

As financial markets widely expected, the Federal Reserve announced today that it is cutting its benchmark interest rate by a quarter point—its first reduction of 2025. After delivering three cuts in late 2024, the Fed shifted into neutral for months, holding rates steady through the first five meetings this year. Today’s move marks a restart of its rate-cutting cycle.

This matters for savers because the federal funds rate directly influences what banks and credit unions pay on savings accounts, money market accounts, and certificates of deposit (CDs). When the Fed raises or lowers its benchmark rate, deposit rates typically follow suit. As a result, today’s cut will likely push deposit rates lower in the weeks ahead.

But today’s meeting delivered more than a point-in-time rate cut. It also included the release of the Fed’s new quarterly rate forecast. Interest rates have already retreated from the peak levels reached in 2023, and the new projections may signal how much further they’ll fall.

What the Fed’s New Forecast Signals for Rates Ahead

Once per quarter, the Federal Reserve releases a new Summary of Economic Projections alongside its rate decision. One of the most closely watched elements is the “dot plot”—a chart populated with anonymous dots showing where each Fed official expects the federal funds rate to land in the years ahead.

Today’s new dot plot shows that among the 19 committee members, the median projection calls for another half-point in rate cuts by the end of 2025. With just two meetings left this year, that would likely mean one quarter-point cut at each meeting. But the outlook isn’t unanimous: Six officials—nearly a third of the voting members—projected no additional 2025 cuts after today’s move.

As always, the dot plot offers guidance, not a guarantee. The central bankers make their decisions meeting by meeting, based on the freshest data. With elevated inflation, President Trump’s ever-evolving tariff policy, and other uncertainties still rippling through the economy, the actual path of rates could differ significantly from these projections.

Federal Reserve Chair Jerome Powell put it this way in his post-announcement press conference: “Rather than looking at this as certainty, I would encourage people, as always, to look at the [dot plot] through the lens of probability. There are different possible outcomes and likelihoods, rather than, this one is certain and this one isn’t happening.”

Why High-Yield Savings and CDs Are Still Worth It

The days of peak deposit rates are in the rearview mirror. With the Fed now cutting again, savings and CD yields are expected to drift lower through the rest of 2025. But that doesn’t mean savers are suddenly out of luck. Rates are easing gradually, not falling off a cliff—and they remain attractive by historical standards.

Currently, the top 15 high-yield savings accounts offer between 4.31% and 5.00% APY. Meanwhile, the best nationwide CDs, which let you lock in a rate for months or years, are paying 4.40% to 4.60% on terms from 3 to 12 months—and longer durations still offer lower-4% returns. While these figures are a step down from last year’s highs, they’re still far above the sub-1% yields that savers endured for much of the past decade.

For anyone looking to make the most of today’s climate, the path forward is clear. Savings account rates will drift lower, but the best ones will continue to offer one of the best ways to earn a solid return while keeping cash fully flexible. Meanwhile, CDs give you the chance to lock in today’s elevated rates for months or even years to come. But if you want that rate guarantee, it’s best to act fast, since any CD rate you see today could be gone tomorrow—especially now that the Fed has started cutting.

If yields inch lower from here—an if, not a certainty—today’s savings and CD rates remain excellent by historical standards. That means savers still have a rare opportunity to earn meaningful returns on cash with almost no risk. The window for strong deposit rates isn’t closing just yet.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.

Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.