The Federal Reserve has promised to be"data driven" in deciding when to cut interest rates. But some of the recent economic data has the central bank driving in circles.
Inflation fell sharply in the second half of last year, leading some to believe the Fed would soon be ready to take its foot off the brake and start cutting interest rates. But that progress on prices has since slowed, and Fed watchers now expect the Fed to keep its benchmark interest rate at a 23-year high, at least through the summer.
"You typically take out a loan for when you make a big goods purchase, like a car, certainly a house," Tedeschi says."Services spending is generally less interest rate-sensitive."
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How Long Will High CD Rates Last?Inflation has been high for years now, and while it's decreased quite a bit from its peak of 9.1% in June 2022, it's still below the Federal Reserve's target goal of 2%. To move the needle and curb spending further, the Fed has kept interest rates paused at a 23-year high at its last three meetings. While that's bad for consumers using credit cards, mortgages and loans, as higher rates mean paying more in interest on the money borrowed, it's a boon for savers, resulting in hefty interest rates on savings accounts and certificates of deposit (CDs). What goes up must come down, though, and at some point, the Fed is likely to make rate cuts once inflation is under control. While the Fed rate doesn't directly impact the rates on savings accounts and CDs, the two generally move in the same direction. So the question remains: How long will these high CD rates last? And if the Fed does cut rates, how far will CD rates have to fall? Find out the best CD options available to you today
Source: CBSNews - 🏆 87. / 68 Read more »