Fed Pushes Out Any Rate Increases Further into 2016
The Fed met this past week and declined to raise interest rates, pushing out any increases further out into 2016. When the year started, the Fed expected to raise the fed funds rate four times by the end 2016. There has been only one 1/4 point increase in December 2015 and none since.
There are four scheduled meetings left in 2016 and it's highly unlikely the Fed will increase the rate in all four meetings. The most recent economic projections released by the Fed last week shows the median forecast for the fed funds rate to be 0.90 percent by the end of 2016. The forecast rate is as low as 0.60 percent and as high as 1.40 percent.
The current fed funds rate is in a targeted range of 0.25 percent to 0.50 percent. If the Fed's projections are correct, there will only be one or two rate increases in 2016. Of course, any increases will be highly dependent on economic data released in the coming months.
Savings rates and money market rates moved only slightly higher since the December increase. Any further increases will be dependent on a higher fed funds rate. If the fed funds rate is increased to 0.90 percent, the best savings rates and money market rates will head towards 1.50 percent.
Currently, the highest savings rate on our rate table is at 1.10 percent with a yield of 1.11 percent from Silvergate Bank. The highest money market rate on the table is also at 1.11 percent from EverBank. You can search for the best deposit rates by using our variable deposit tables at Best Variable Deposit Rates.
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