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

Introduction to the Federal Reserve’s Rate Cut

The Federal Reserve announced a cut in its benchmark interest rate by a quarter point, marking its first reduction of 2025. This decision came after the Fed held rates steady through the first five meetings of the year, following three cuts in late 2024. The rate cut is expected to impact deposit rates, including savings accounts, money market accounts, and certificates of deposit (CDs).

How the Fed’s Rate Cut Will Affect Your Savings

The federal funds rate directly influences what banks and credit unions pay on deposit accounts. As a result, the Fed’s rate cut will likely push deposit rates lower in the coming weeks. However, rates will ease gradually, not dramatically, and will remain attractive by historical standards. The median forecast from the Fed’s quarterly projection suggests another 0.50 percentage points in cuts by year-end, which could lead to lower savings and CD yields.

What the Fed’s New Forecast Signals for Rates Ahead

The Fed’s new quarterly rate forecast, released alongside its rate decision, includes a "dot plot" that shows where each Fed official expects the federal funds rate to land in the years ahead. The median projection calls for another half-point in rate cuts by the end of 2025, with six officials projecting no additional cuts after the current move. However, the outlook is not unanimous, and the actual path of rates could differ significantly from these projections.

Looking Ahead to 2026 and Beyond!

Interest rate projections beyond the current year are always less reliable, as they depend on economic trends that can shift quickly. The latest dot plot shows that the Fed’s median forecast for 2026 calls for just a quarter-point reduction from 2025 levels, followed by another quarter-point cut in 2027. While these projections are subject to change, they provide guidance on the potential direction of interest rates in the coming years.

Why High-Yield Savings and CDs Are Still Worth It

Despite the Fed’s rate cut, savings and CD yields remain attractive by historical standards. The top 15 high-yield savings accounts offer between 4.31% and 5.00% APY, while the best nationwide CDs pay 4.40% to 4.60% on terms from 3 to 12 months. These rates are expected to drift lower through the rest of 2025 but will remain strong compared to the sub-1% yields that savers endured for much of the past decade.

Making the Most of Today’s Interest Rate Climate

For anyone looking to make the most of today’s interest rate climate, the path forward is clear. Savings yields will drift lower, but the best ones will continue to offer solid returns 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. However, if you want that rate guarantee, it’s best to act fast, since any CD rate you see today could be gone tomorrow.

Daily Rankings of the Best CDs and Savings Accounts

We update our rankings every business day to give you the best deposit rates available. Our rankings are based on data from hundreds of banks and credit unions, and we only include institutions that are federally insured and have a minimum initial deposit requirement of $25,000 or less.

How We Find the Best Savings and CD Rates

Every business day, we track the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide. To qualify for our lists, the institution must be federally insured, and the account’s minimum initial deposit must not exceed $25,000. We also exclude credit unions whose donation requirement is $40 or more.

Conclusion

In conclusion, the Federal Reserve’s rate cut is expected to impact deposit rates, but savings and CD yields will remain attractive by historical standards. By understanding the Fed’s new forecast and making the most of today’s interest rate climate, savers can still earn meaningful returns on their cash with almost no risk. Whether you’re looking for a high-yield savings account or a CD, there are still plenty of opportunities to make the most of your money.