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Fed Rate Cut Looms: Your Savings May Shrink Soon
2 Dec
Summary
- A third Fed rate cut in 2025 is expected next week.
- Savings and CD yields may soon decrease as rates fall.
- Lock in current high CD rates before the Fed's cut.
The Federal Reserve is widely expected to enact its third interest rate reduction of 2025 next week, following previous quarter-point cuts in September and October. Market indicators suggest a strong probability of this upcoming adjustment, which will directly influence the rates banks offer on savings accounts and certificates of deposit (CDs).
As a result, deposit yields are projected to decline in the coming weeks. However, current rates remain historically attractive, with many accounts still providing returns in the mid-4% range despite the Fed's previous actions to curb inflation by raising rates to a 23-year high. This situation presents a narrowing window for consumers to secure the best available CD rates.
To mitigate the impact of falling yields, savers can adopt proactive strategies. Regularly checking savings account Annual Percentage Yields (APYs) and seeking out higher-yield alternatives is recommended. For funds not immediately needed, locking in a CD before the anticipated rate cut can guarantee today's higher interest rates well into 2026, ensuring money continues to work effectively even as the market shifts.
