Here’s What the Fed Now Predicts for 2025 Rate Moves—And What It Means for Savings and CD Rates

Takeaways

• The Fed announced Wednesday another rate pause, an almost certain move that would keep the federal fund rate at its current levels: 4.25% to 4.5%.
• This benchmark rate is very important for savers as it directly affects the rates that banks and Credit Unions are willing pay on savings and CDs.
• The Fed has also released its quarterly forecast “dot plot”, which estimates a 0.50-point reduction by 2025’s end, and another half-point decline in 2026.
• Earn a good return with one of the top high-yielding savings accounts or lock in a rate that will last for months or even years with today’s best CDs.

The full article can be found below these offers.

What the Fed Announced on Rates Wednesday

The Federal Reserve’s rate setting committee announced on Wednesday that the federal funds rate will remain at its current level between 4.25% and 4.50%. This was widely expected. Savings are important because banks and credit unions follow changes in the federal funds rate. They change the rates of deposit accounts such as savings and certificate of deposit (CDs).

In its official statement, the Fed noted that its goals are "to achieve maximum employment and inflation at the rate of 2 percent over the longer run." It plans to "monitor the implications of incoming information for the economic outlook" and noted that it "would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals."

The central bank raised the federal funds rate to a 23-year-high level from July 2023 to September 2024 to combat inflation that had been high for decades. In the fall of 2024 the Fed began a rate-cutting period, with reductions in rates in September, December, and November. The Fed’s goal was to bring inflation down. The Fed benchmark rate was reduced by a whole percentage point with the three rate cuts.

But inflation is still stubborn, hovering around 3% but not quite at the Fed’s target of 2%. The central bank held rates steady at both its January and yesterday meetings. We will see that the Fed provided some additional insight at its meeting, as we will discuss in more detail below.

What the Fed predicts for the rest of 2025

Every three months the Fed includes a summary of economic projections in its rate announcement. The latest release was made on Wednesday and the “dot chart” forecast contained in it has caught everyone’s attention. The chart is named this way because each member of the Fed committee is represented as a dot on a graph. Each member predicts what the federal funds rate at the end each year will be.

Wednesday's dot plot shows that across the 19 Fed committee members, the median projection is for an additional 0.50-point rate cut across the remaining six meetings of 2025. Fed committee members predict that the rate will be cut by another 0.50-points in 2026. If that comes to fruition, it would result in a federal funds range of 3.25%–3.50% vs. the 4.25%–4.50% target maintained yesterday.

When asked at the Fed’s post-announcement press conference about the timing of future rate cuts and the possibility of pivoting back toward rate cuts in May, Federal Reserve Chair Jerome Powell indicated a measured approach. “I don’t believe we will be in any rush to move,” he stated. “As I said, I believe we are in a good position to wait for more clarity and not be in a hurry.”

Tip

Markets are betting that the first rate cut in 2025 will be a few more months away. According to CME Group’s FedWatch tool, at the time this article was written, most traders were pricing in a rate hold at the Fed meeting in May. The June meeting is where we first see a majority of traders pricing in a rate cut.

With rates still attractive, high-yield savings accounts and top-paying CDs are smart right now

Thanks to the Fed pushing interest rates up dramatically in 2022–2023, savings accounts and certificates of deposit have been paying handsomely. Even though rates on the highest-yielding accounts and CDs have fallen throughout 2024 you can still earn a high return of up to 4%. One promotional CD pays 5.00% APY and has an 18-month lock in rate.

It is not possible to predict the Fed’s future course. The economic policies of Trump’s administration have created an additional layer in uncertainty. In a statement released on Wednesday, the Fed’s rate setting committee stated that “uncertainty has increased” regarding the economic outlook. The Fed’s outlook has become more pessimistic since December, signaling a growing threat of “stagflation,” which is a combination of high unemployment, inflation, and slow economic expansion.

Interest rates are expected to drop in 2025, and possibly also in 2026. While they are still available, you can take advantage of the best rates on high-yielding savings accounts. It’s also smart to lock in one of the best CD rates available today if you plan on saving some money for later. This will guarantee a high interest rate for many months or even years.

Daily Rankings for the Best CDs & Savings Accounts

We update this ranking every day of the week to provide you with the best rates for deposits.

• Best 3-Month Rates
• Best 6-Month CD rates
• Best 1-Year Cd Rates
• Best CD Rates for 18-Month Term
• Best 2-Year Rates on CDs
• Best 3-Year Rates on CDs
• Best 4-Year Rates
• Best 5-Year CD rates
• Best High-Yielding Savings Accounts
• Best Money Market accounts

It is important to note that

Note that the "top rates" quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is a much higher rate than the national average which includes all banks with a CD of that term. This includes many large banks who pay pittances in interest. The national averages are usually quite low. However, if you shop around, you can find rates that are 5, 10, or 15 times higher.

How we find the best CD rates and savings

Investopedia ranks the best-paying savings and CD accounts every day. It tracks rate data from more than 200 credit unions and banks that offer these accounts nationwide. For an institution to qualify for our lists it must be federally-insured (FDIC or NCUA for banks and credit unions) and the account must have a minimum initial deposit of no more than $25,000. It cannot also specify a maximum amount of deposit that is below $5,000.

To qualify as a national bank, the bank must be located in at least forty states. While some credit unions ask you to donate to an association or charity to become a part of their organization if you do meet other criteria (e.g. if you live in certain areas or work in certain jobs), we exclude credit cooperatives that require a donation of $40 or more. Read our methodology to learn more about how we select the best rates.

Article Sources Investopedia requires that writers use primary sources in order to support their work. White papers, government data and original reporting are some of the sources. Where appropriate, we also reference original research by other reputable publishers. Learn more about our standards for producing accurate and unbiased content by visiting our Editorial Policy

1. Federal Reserve Board. "Federal Reserve Issues FOMC Statement, March 19, 2025."

2. Federal Reserve Board. "Open Market Operations."

3. U.S. Bureau of Labor Statistics "Consumer Price Index for All Urban Consumers (CPI-U)."

4. Federal Reserve Board. "Summary of Economic Projections, March 19, 2025," Page 4.

5. Federal Reserve Board. “FOMC Press conference,” March 19, 2025. (Video.)

6. CME Group. "CME FedWatch Tool."