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What happened

When the Federal Reserve gathers in late September, the central bank is likely to leave interest rates alone — or so says a group of economists asked in a recent Reuters poll. In fact, the general consensus is that interest rates are unlikely to go up or down prior to the second quarter of 2024.

So what

The Federal has raised interest rates 11 times since March of 2022 in an effort to cool inflation. And its effort has been paying off.

In June of 2022, annual inflation peaked at 9.1% as per that month’s Consumer Price Index (CPI), which measures changes in the cost of consumer goods and services. By comparison, in August of 2022, annual inflation was measured at 3.7% by the CPI.

But while inflation levels have receded, the Fed’s ultimate goal is to get the CPI down to 2% on an annual basis. It’s this level, the central bank feels, that’s most conducive to long-term economic stability. As such, the Fed is unlikely to cut rates until inflation gets closer to that mark. If anything, it may decide to raise rates one more time in 2023.

“Though we continue to expect the Fed to remain on hold at the Sept. 20 FOMC meeting, we would not be surprised to see most officials continue to project one more rate hike by year-end in their updated ‘dot plot,'” said Brett Ryan, senior U.S. economist at Deutsche Bank, referring to the interest rate projections released by Federal Reserve policymakers on a quarterly basis.

Now what

Many consumers are eagerly waiting for the Fed to cut interest rates so that borrowing becomes more affordable. Right now, it’s expensive to sign a personal loan, auto loan, or just about any loan, even with excellent credit.

But while elevated interest rates are bad news for borrowers, they’re great for savers. So if you have money you’re able to move into a savings account, you may want to do so in the coming months to take advantage of higher rates before Q2 of 2024.

It could also pay to lock in a certificate of deposit over the next few months, while rates are still up. The interest rate on your savings account can change over time with market conditions. But when you open a CD, the rate you sign up at is the rate you’re guaranteed to continue receiving until your CD matures.

If you’re interested in opening a CD, you may want to wait until after the Fed’s Sept. 20 meeting to do so. If the central bank does decide to raise rates, you may find that you’re able to snag a higher rate on a CD following that announcement.

Savings accounts and CDs are risk-free provided you bank at an FDIC-insured institution and limit your deposit to $250,000. At a time when stocks are expensive to buy, it could pay to park some cash in a CD and wait things out, since many CDs are paying 5% interest or more.

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