![]() What the Fed's next move means for your money In this case, options with a fixed rate, such as a CD, may be worth considering, so you can lock in a high rate now. On the other hand, rates may slowly drop, and any account with a variable rate may see a decrease in the APY, meaning you'll earn less on your savings. If the Fed does not raise rates, you can expect one of two things to happen: Rates will remain stagnant, which can be good if you want more time to choose the right savings account option or continue to earn a decent yield on the high-yield savings account you already have. "It could be argued that the Silicon Valley Bank effect makes a Fed move unnecessary," said Vado. What's more, there's already a decline in access to credit and borrowing. There are a few reasons that could happen.įirst, banks are feeling stress from tightening underwriting standards, provoked by recent bank failures and other factors, she said. There's a chance that the Fed will do nothing, said Ligia Vado, a senior economist for the Credit Union National Association. "We should wait for the dust to settle from all the fast and furious rate hikes we already had." "I am hoping they are done with raising, but I didn't want them to raise after the Silicon Valley Bank collapse, and they did," said Cary Carbonaro, a certified financial planner and director of the women and wealth division at Advisors Capital Management. Based on Powell's comments, last month's consumer price index report and signs of inflation cooling off, some experts believe that the recent streak of rate hikes is over for the foreseeable future. "We no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation instead, we now anticipate that some additional policy firming may be appropriate," Powell said. ![]() While some experts believe the work of taming inflation isn't done, Powell noted at the March FOMC meeting that the US economy slowed significantly. What to expect if the Fed doesn't raise rates ![]() "The next FOMC meeting in May might be the last interest rate hike of the year," she said. She believes reaching the 2% target rate will take some time. The Federal Reserve Bank has raised the federal funds rate several times since 2022 to combat inflation, pointing to how long it can take to level the economy and inflation. "Inflation goes up like a rocket ship but comes down like a parachute," said Cooper. And it doesn't come down as easily as it goes up. Inflation is the highest it's been in over 40 years, said Chelsea Ransom-Cooper, managing partner and financial planning director at Zenith Wealth Partners. "This will probably lead to banks adjusting rates higher from where we are today." While Sprung expects rates to rise a bit more, he does not expect them to surpass the highs we experienced several weeks ago. "I believe that the Fed will be raising rates by 25 bps at the May meeting," said Lawrence Sprung, a certified financial planner and author of Financial Planning Made Personal. Since we're not quite at the Fed's 2% target range, there's a chance that we'll see another rate hike, but not as significant as last year's 50 to 75 basis point increases. But inflation is still high, at 5% year over year. The latest Consumer Price Index report shows that inflation only rose by 0.1% from February to March - a smaller increase from months prior. But some experts believe the Fed may hike rates once last time in May. The March 10 collapse of California-based SVB and the subsequent collapse of New York-based Signature Bank highlighted broader concerns about the health of the banking sector, and raised the possibility that further Fed rate increases might tip the economy towards a financial crisis.ĭon’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp.Experts are divided on whether the Fed will raise rates again or pause their rate hike. The outcome of the two-day meeting this week marks an abrupt repositioning of the central bank's strategy from just two weeks ago, when Fed Chair Jerome Powell testified in Congress that hotter-than-expected inflation would likely force the central bank to raise interest rates higher and possibly faster than expected. Inflation is now seen ending the year at 3.3%, compared to 3.1% in the last projections. Officials projected the unemployment rate to end the year at 4.5%, slightly below the 4.6% seen as of December, while the outlook for economic growth fell slightly to 0.4% from 0.5% in the previous projections. Job gains are "robust," according to the Fed.
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