Interest rates on top-yielding CDs are dropping. Here’s what that means for savers
Matthew Goldberg | (TNS) Bankrate.com
Savers, take note: Your options for high-yielding certificates of deposit (CDs) are getting fewer by the day. What’s more, high-yield savings and money market accounts – variable rate deposit accounts that are prone to change in lock step with changes to the federal funds rate as set by the Federal Reserve – could see their yields drop before the Fed’s next interest rate meeting on Sept. 18.
Financial pundits and market prognosticators are confident that the Fed will lower interest rates in September. As of Aug. 8, the CME Group FedWatch tool, which is based on federal fund futures contract prices, projects a 100 percent likelihood of a rate cut. Inflation is down and unemployment is up, two reasons for the Fed to lower rates at its next meeting.
But the latest performance in financial markets has also affected some yields on deposit accounts, most notably CDs. In the course of a few days late last week, economic uncertainty in the U.S. over inflation, a weakening jobs report and fears of a possible, yet unsubstantiated, recession, sent financial markets roiling, particularly in Japan.