If you are considering opening a new savings account or deposit certificate (CD), you know how the Fed’s decisions influence your interest profits over time is key to making an informed decision on where to put your money.
The Federal Open Market Committee (FOMC) will hold its next meeting on July 29-30, 2025. During this time, commission members will determine whether to collect, maintain or reduce the percentage of federal funds.
These rates solutions are key indicators of economy health and are ultimately reduced to influence deposit accounts. Here is more closely how you can take advantage of today’s CD prices and savings in the light of the Fed’s political decisions.
The federal percentage of the funds is the target interest rate determined by the Federal Reserve. It determines the percentage that banks are charged with each other for a night to meet the reserve requirements.
The federal fund rate is expressed as a range, which is currently 4.25% – 4.50%. Banks negotiate a specific rate with each other in this range.
The Fed uses the percentage of funds as a tool for suppressing inflation. When inflation is high, Fed raises his target course to make money to borrow more expensive, which discourages consumer expenses and helps reduce daily costs. When the economy needs impetus, the Fed can initiate a series of tariff cuts to promote more costs and loans.
Read more: A look at the federal funds in the last 50 years: How has it changed?
Changes in federal funds have major consequences for financial institutions and the economy as a whole. But these solutions also affect your bottom line.
Although the Fed’s interest does not directly affect the interest rates determined by the individual banks for consumer deposits and loans, they are closely related. When the Fed raises its interest, for example, interest rates on deposit products such as high -profile savings and CDs also tend to rise. And when it lowers its interest rate, interest rates in the deposit usually fall.
The Fed will meet again on July 29-30 and does not decide whether to correct or not the percentage of federal funds. (At its last meeting, the Committee maintains the target range for federal funds at 4.25% – 4.50%.) The Fed maintains this target range since its last percentage in December 2024.
As economic activity continues to expand at a solid rate, many wonder if the Fed will reduce his target course this year. At its last meeting, the committee released the following statement:
“In evaluating the appropriate position of monetary policy, the Committee will continue to monitor the consequences of incoming economic prospects. The Committee will be ready to correct the position of monetary policy as it is appropriate if there are risks that could prevent the goals of the Commission.
Fed is expected to hold his target rate again stable in his next meeting. This means that there will probably be no major interest on interest rates for the moment. However, many experts believe that the Fed will reduce its percentage in September.
This was said that we could not know for sure what would happen. So as you wait for the Fed’s official message about how they will change (or not), it may be an appropriate time to evaluate your current savings account or consider opening a new account.
If the Fed decides to maintain the tariffs, it will not have a direct impact on your savings and CD percentages, which means that it is now as good a time as everyone will open an account and take advantage of the historically high interest rates. It seems that the best savings and CD bills pay about 4% or more.
However, if the Fed decides to reduce prices, it may now be your last chance to lock today’s competitive prices with CD.
In the end, the wait, while the next Fed message before opening a new deposit account will not have a significant impact on your potential revenue. Now is as a good time as anyone to compare the current prices of your existing accounts and see if you can earn more elsewhere.
For example, say that your existing savings account earns 0.38%, the country average for traditional savings accounts. If you have deposited $ 10,000, you would earn a total of $ 38 interest in one year.
However, some of the best high-yield savings accounts offer about 4%. If you have deposited $ 10,000 at this rate, you will earn $ 400 interest in a year. This means that you could miss considerable potential for profit by leaving your money in an account with low interest rates.
Regardless of how the Fed adjusts the interest of federal funds, it pays for reassessment of its current accounts and ensures that you are earning the best as possible.
Read more: How to choose the right high -yield savings account for you