Higher Fed Funds Rate Later This Year Will Send Deposit Rates Higher
Federal Reserve Chairwoman, Janet Yellen, said in a speech to the Chamber of Commerce in Providence, R.I, that she still expects the Fed to start raising its benchmark interest rate later this year. A hike in the federal funds rate will send savings rates and money market rates higher.
We expected the Fed to increase the rate during their scheduled June meeting. It now looks like a rate hike during the June meeting is off the table. An increase will probably come during the July or September meeting. The Fed is eager to normalize monetary policy by increasing the fed funds rate from the current target of zero percent to one quarter percent.
Janet Yellen said the following in Providence:
If the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy.
The first increase in the rate will be 0.25 percent and the subsequent increases will also be 0.25 basis points. Currently the best savings rates are at 1.05 percent. Average deposit rates, listed to the right, are much lower. A 0.25 percent rate hike in the fed funds rate will send the highest savings rates and money market rates towards 1.35 percent.
This past week we saw one online bank increase their money market rate more than 22 percent. iGObanking increased their money market account rate from 0.90 percent APY to 1.10 percent APY. iGObanking now has the best variable deposit rate in our database.
Listed below are the top deposit rates for May 27, 2015:
Top Money Market Rates
Top Savings Account Rates
Deposit account rates change all the time, check our rate database for the most current list of rates: Best Deposit Rates
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