What the Fed’s New Rate Outlook Signals for 2025 Savings and CD Rates

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Here’s What the Fed Decided About Interest Rates Today

As financial markets widely expected, the Federal Reserve announced Wednesday that it’s leaving the federal funds rate unchanged. This marks the central bank’s fourth straight meeting of holding steady, as officials continue a patient “wait and see” approach.

The federal funds rate directly influences what banks and credit unions offer on high-yield savings, money market, and certificate of deposit (CD) accounts. When the Fed raises or lowers its benchmark rate, deposit rates tend to follow suit—moving higher or lower in response.

The Fed first raised the federal funds rate to a 23-year high in July 2023 to help combat the highest inflation seen in decades. That peak level held through September 2024, after which the central bank began a modest rate-cutting cycle. Between September and December, the Fed reduced rates three times, trimming a full percentage point off its benchmark rate.

But in 2025, the Fed has so far held off on additional cuts, even though inflation has cooled considerably. A key factor in its caution is President Donald Trump’s tariff policy, initially announced in April. With the economic effects of recent tariffs still unfolding—and more tariffs still on the way—the Fed is holding off on further moves until it sees how trade developments play out in the months ahead.

Fed Chair Jerome Powell acknowledged this uncertainty in his opening remarks at Wednesday’s post-announcement press conference, noting: “Changes to trade, immigration, fiscal, and regulatory policies continue to evolve, and their effects on the economy remain uncertain. The effects of tariffs will depend, among other things, on their ultimate level.”

The Fed’s Forecast: How Rates Could Move Through the End of 2025

Every three months, the Federal Reserve releases a new Summary of Economic Projections alongside its rate decision. One of the most closely watched elements is the “dot plot”—a chart of anonymous dots showing where each Fed official expects the federal funds rate to land in the years ahead.

The latest dot plot, released Wednesday, shows that among the 19 committee members, the median projection calls for two rate cuts—totaling 0.50 percentage points—across the remaining four meetings of 2025. Notably, however, seven members (37%) anticipate no cuts at all this year.

Of course, what the Fed ultimately does over the next six months will depend on how the economy evolves. Rate decisions are made meeting by meeting, based on the latest data. And with the full impact of new tariffs still rippling through the economy, the dot plot forecast should be viewed as a real-time estimate, not a firm roadmap.

Powell underscored that point at Wednesday’s press conference. “There are many different combinations of scenarios, where inflation does or doesn’t prove to be at the levels we think and where the labor market does or doesn’t soften,” he said. “And I think what you’d see [committee members] doing is looking ahead at a time of very high uncertainty and writing down what they think the most likely case is.”

“No one holds these rate paths with a great deal of conviction,” Powell added. “Everyone would agree that they’re all going to be data dependent—and that you can make a case for any of the rate paths. … We do this once a quarter. It’s a hard thing to do, particularly at this time.”

Why High-Yield Savings and Top CDs Are Still Smart Plays—And Worth Locking In Now

Thanks to the Fed’s aggressive rate hikes in 2022 and 2023, savings accounts and certificates of deposit (CDs) have offered standout returns. While top yields edged lower in 2024 and early 2025, the best high-yield savings accounts and top CDs are still paying historically strong rates in the mid- to upper-4% range. One nationwide CD is currently offering 4.60% APY with a 9-month term, and a dozen others are paying 4.50% on terms as long as 21 months.

Looking ahead, most forecasts call for interest rates to decline in 2025—and potentially again in 2026. And once a Fed rate cut appears imminent, banks and credit unions are likely to respond quickly by trimming their deposit rates. That makes now a smart time to capitalize on elevated yields, whether through a high-yield savings account or by locking in a guaranteed CD rate that extends well into the future.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.

Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.