From Time:

The Federal Reserve’s war on inflation appears to winding down as the central bank holds rates steady and prepares to start cutting them later this year. When the Fed changes these benchmark interest rates, APYs on consumer deposit accounts like certificates of deposit (CDs), high-yield savings accounts and money market accounts are expected to quickly follow suit.

Interest rates on savings accounts are largely expected to drop this year. For many financial experts, they’re not questioning if rates will fall — but when and by how much. Right now, high-yield savings accounts with APYs as high as 4% and 5% are still available, but they may soon start to retreat.

The Federal Reserve has signaled it may cut interest rates three or more times in 2024, and some analysts are expecting as many as six cuts. According to the CME FedWatch Tool, investors largely expect the Fed to hold rates steady in January — with most predicting a 0.25 percentage point rate cut as soon as March.

While it seems apparent that the Fed plans to cut benchmark rates this year, it’s impossible to know exactly what’s going to happen, or when. With savings accounts, your interest rate is variable, meaning the bank can change it at any time. There’s no “locking in” your rate like with other options like CDs or I bonds.

Short-term CDs from around three months to a year are boasting fairly high rates, often 5% APY or higher. Money market accounts have rates around 4% to 5%, similar to high-yield savings accounts. I bonds are government bonds bought from the U.S. Department of the Treasury, designed to shield your savings from rising prices and have an interest rate at 5.27%.



Read more: High-Yield Savings Account Rates: APY Predictions for 2024