Key insights
- The Fed is expected to hold rates steady, influenced by the recent CPI increase to 3.3%. Markets now anticipate potential rate cuts being delayed until late 2027, according to the CME FedWatch Tool. This prolonged period of higher rates could negatively impact equity valuations, particularly for growth stocks, due to increased borrowing costs and higher discount rates.
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The Federal Reserve is overwhelmingly expected to leave its benchmark rate unchanged when the central bankers wrap up their meeting Wednesday. After cutting interest rates three times last fall, the Fed has shifted into a “wait and see” mode so far in 2026, as inflation has proven uneven.
Price pressures had been cooling earlier this year, with annual inflation running at 2.4% in both January and February. But the latest CPI reading showed inflation jumping to 3.3% in March, driven largely by a surge in energy costs tied to the Iran conflict.
That rebound in inflation—along with heightened uncertainty from geopolitical tensions that are clouding the inflation outlook—is expected to keep the Fed in a holding pattern for now.
Even so, the bigger question for savers isn’t just what the Fed does this week—it’s how long rates might stay near current levels.
The Fed isn’t expected to move this week, and rate cuts may still be a long time in coming—meaning you could have more time to benefit from today’s strong savings and CD rates.
Markets got their last official look at the Fed’s rate outlook in March, when policymakers released their quarterly “dot plot.” At the time, roughly three-quarters of officials signaled a “hold or barely move” stance for the rest of the year, reinforcing expectations that rate cuts wouldn’t come quickly.
But those projections were made weeks before the March CPI report showed inflation shooting up to 3.3%, a reminder that the outlook can shift quickly as new data comes in.
To gauge what markets expect for rate cuts right now, we can look to the CME FedWatch Tool. Current pricing shows less than a 30% chance of a rate cut by the end of this year. In fact, traders don’t assign majority odds to a rate cut until September 2027—underscoring how far the timeline for lower rates could stretch.
That said, new economic data—as well as global developments—can shift projections quickly. While tools like FedWatch provide insight into current expectations, they reflect probabilities—not certainties—and can change as new information comes in.
If interest rates stay higher for longer, that could translate into more time for savers to earn strong returns on cash. Yields on high-yield savings accounts and certificates of deposit (CDs) tend to track the Fed’s benchmark rate, so when rate cuts are delayed, those returns can stick around.
Right now, today’s best high-yield savings accounts pay up to 5.00%, with more than a dozen options paying APYs in the 4% range. Meanwhile, you can lock in up to 5.00% with the top 6-month CD, or a yield up to 4.20% on terms of 1–5 years. That means savers still have an opportunity to earn well above the inflation rate on their cash in the bank.
Savings accounts offer flexibility, letting you deposit and withdraw funds whenever you like. But their rates are variable—meaning banks can lower them at any time, often without warning. CDs, on the other hand, let you lock in a fixed APY that’s yours to keep for the full maturity term, whether that’s a few months or several years.
Whatever you choose, the takeaway is the same: While the exact path of Fed policy remains uncertain, the current rate environment continues to offer one of the most attractive backdrops for savers in years—and that window may not close as quickly as many once thought.