How the Federal Reserve's Decision to Hold Rates Steady Affects Your Savings
We explore how the Federal Reserve's decision to maintain interest rates impacts your savings strategy.

Carla Ayers
Typically, when the Fed raises interest rates, banks increase the yields on savings accounts to attract deposits. Conversely, rate cuts often lead to reduced returns for savers. With the Fed keeping rates steady, the interest rates on savings accounts are expected to remain relatively stable in the short term.
The Federal Reserve's recent decision to maintain interest rates between 4.25% and 4.50% means that high-yield savings accounts (HYSAs) and certificates of deposit (CDs) will likely continue to offer attractive annual percentage yields (APYs), with some exceeding 4%. For example, Axos Bank currently offers a HYSA with an APY of 4.86%. This is great news for savers looking to maximize their returns.
While the Federal Reserve has currently paused rate changes, future decisions will depend on economic indicators such as inflation, employment data and the impact of recent trade policies.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Should the Fed decide to cut rates in the future, yields on savings accounts may gradually decline.
Still, if you don't already have one, it's worth opening a high-yield savings account despite the next Fed meeting, so you can take advantage of high rates before they significantly fall. Even though rates are lower, there are still higher returns for your cash in high-yield savings accounts than sitting in an average checking or savings account.
Another option, which can help you avoid falling rates completely, is to open a CD account. Since the APY on a CD account is fixed, if you lock up your cash in one now, you won't have to worry about your APY going down until the CD matures. Just make sure you're comfortable with not being able to access your cash until the account matures.
The Fed's impact on savings rates
Beginning in March 2022, the Federal Reserve initiated a series of 11 interest rate hikes to combat soaring inflation, which peaked at 9.1%. This aggressive monetary tightening elevated the federal funds rate to a target range of 5.25% to 5.50%, marking the highest level in 23 years.
However, as inflationary pressures began to subside, the Federal Reserve shifted its stance, opting to hold interest rates steady in the first quarter of 2025. This pause in rate hikes led to a stabilization, and in some cases, a slight decline in savings rates. Financial institutions adjusted their offerings accordingly, with some reducing the APYs on their savings products.
Looking ahead, if the Federal Reserve moves to cut interest rates in response to cooling inflation, savers can anticipate further decreases in the yields of HYSAs and CDs. To optimize returns in a shifting economic landscape, it's important to stay informed. By regularly comparing offerings from various financial institutions, savers can adjust their strategies effectively to maintain favorable returns.
You can compare savings rates for both high-yield savings accounts and CDs below.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.
- Carla AyersE-Commerce & Personal Finance Editor
-
Trump's Immigration Policies and the Price of Home Healthcare: First 100 Days
President Trump's immigration policies may wallop your pocketbook if you rely on a home healthcare aide.
-
Stock Market Today: Stocks Extend a Quiet Winning Streak
The S&P 500 Index could actually close April with a monthly gain, which would be an extraordinary sign of market resilience.
-
Stock Market Today: Stocks Extend a Quiet Winning Streak
The S&P 500 Index could actually close April with a monthly gain, which would be an extraordinary sign of market resilience.
-
Amazon Considered Displaying Tariff Charges on Some Products
How much will tariffs increase Amazon's prices?
-
How Trump's First 100 Days Have Impacted Your Portfolio
President Trump's first 100 days in office have been busy, with a flurry of executive orders sparking volatility in the stock and bond markets.
-
What to Expect in the Rest of This Year's Job Market
Especially in the most competitive fields, job seekers will need to strategize to stand out.
-
Is It Still Worth It to Gift Savings Bonds?
Kiplinger editor explores if it's still a good idea to get savings bonds as gifts for children, looking at their returns and usability.
-
Get Mint Mobile Unlimited for $15 Monthly With This Deal
Mint Mobile offers their unlimited plan for $15 per month for one year. Is the deal worth it?
-
Don't Veer Off Course at the First Sign of a Squall in the Markets
When markets go nuts and investor sentiment drops, you can keep your sanity by trusting in and sticking with your long-term plan.
-
How Business Owners Can Prepare for a Terminal Diagnosis
The most important thing is readiness, whether the owner faces a life-changing diagnosis or an employee does.