Federal Reserve Meeting to Keep Interest Rates Steady, Savings and CD Rates Expected to Follow

The Federal Reserve is expected to keep interest rates unchanged at its next meeting, with rate cuts anticipated in 2025. Savings account rates are unlikely to change significantly in the short term, while CD rates may start to drop once a rate cut appears likely. However, the economic outlook is clouded by President Trump's shifting tariff policies, making Fed rate forecasts more tentative than usual.

The Federal Reserve is expected to keep interest rates unchanged at its next meeting, scheduled for June 17-18, according to economists and market indicators [2]. This decision aligns with the central bank's cautious approach in the face of ongoing economic uncertainties, particularly surrounding President Trump's shifting tariff policies.

Impact on Savings and CD Rates

In the short term, savings account rates are unlikely to experience significant changes following the Fed's announcement. Banks and credit unions typically adjust their rates in response to Fed moves, but with no rate change expected next week, current savings account rates are expected to remain stable. The best high-yield savings accounts currently offer APYs ranging from 4.30% to 5.00% [1].

CD rates, however, may start to drop as the likelihood of a rate cut increases. Unlike savings accounts, CDs offer a guaranteed rate for the future, making banks cautious about locking in rates they might regret later. If the Fed hints at a near-term rate cut, some institutions may begin lowering their CD rates sooner rather than later [1]. The best CD rates currently stand at up to 4.60% APY [1].

Economic Outlook and Tariff Policies

The economic outlook remains clouded by President Trump's shifting tariff policies. While the latest CPI data showed a modest increase in inflation, the overall economic impact of these tariffs is still uncertain. A recent New York Fed report indicated that businesses have been passing through tariffs, but public inflation expectations have remained relatively stable [3].

Most economists surveyed by Reuters predict that the Fed will resume rate cuts in the next quarter, with the most likely timing being September [2]. By the end of 2025, traders are pricing in a 70% chance of at least half a percentage point in rate cuts by the December meeting [1].

Conclusion

The Federal Reserve's decision to keep interest rates unchanged at its next meeting is in line with its cautious approach to economic uncertainty. Savings account rates are expected to remain stable in the short term, while CD rates may start to drop as the likelihood of a rate cut increases. The economic outlook remains uncertain due to President Trump's shifting tariff policies, making Fed rate forecasts more tentative than usual.

References
[1] https://www.investopedia.com/the-fed-meets-next-week-how-savings-and-cd-rates-are-likely-to-react-11752762
[2] https://gmk.center/en/news/us-federal-reserve-to-keep-rates-unchanged-at-least-until-september-experts/
[3] https://finance.yahoo.com/news/trump-says-fed-lower-rates-140730337.html