Key Takeaways
- Today’s Fed cut was widely expected, but it still signals that savings and CD yields will likely begin drifting a bit lower in the coming weeks.
- The Fed’s 2026 outlook is unusually scattered, from a quarter-point hike to cuts of a point or more, underscoring how much uncertainty policymakers face as they assess inflation and jobs risks.
- High-yield savings accounts and the top CDs are still smart, letting you earn solid returns on your cash while rates are still historically high.
What the Fed’s December Rate Cut Means for Your Savings
As widely expected, the Federal Reserve ended the year with a quarter-point rate cut today—its third reduction of 2025, following similar moves in September and October. That brings total cuts this year to 0.75 percentage points, on top of 1.00 point in cuts delivered in late 2024.
For savers, Fed cuts matter because the federal funds rate directly influences what banks and credit unions pay on deposits. When the central bank trims its benchmark rate, yields on savings accounts and certificates of deposit (CDs) typically follow. That means deposit rates are likely to drift lower in the weeks ahead—but modestly rather than a sharp drop overnight.
The bigger question, however, is what happens after this final 2025 move. With the policy year now closed, attention has shifted squarely to the Fed’s newly released 2026 projections, which offer the first look at how officials expect rates to evolve from here.
Why This Matters to You
The Fed’s last move of the year signals that deposit rates could soften, but the wide range of 2026 projections shows there’s no clear roadmap for what comes next. Knowing how today’s yields stack up can help you make smarter choices about where to keep your cash.
The Fed’s 2026 Rate Outlook Is More Divided Than Usual
Once per quarter, the Fed releases new economic projections alongside its rate decision, including the closely watched “dot plot.” Each dot represents one Fed official’s expectation on where the federal funds rate will land by the end of a given year. And this time, the 2026 outlook is strikingly scattered.
The median projection calls for a single quarter-point rate cut in 2026. But that midpoint obscures just how divided policymakers are. Three officials signaled they see rates rising next year, while two anticipate cuts totaling at least a percentage point. The distribution of 19 members’ forecasts spans everything from a 0.25-point rate hike to 1.50 points in cuts, with several clusters in between.
A split this wide highlights the Fed’s central dilemma. In recent months, economic signals have been pushing in opposite directions: Unemployment has drifted higher even as inflation has reaccelerated, leaving officials to weigh which risk poses the greater threat. As Fed Chair Jerome Powell noted today, “A very large number of participants agree that risks are to the upside for unemployment and to the upside for inflation … You’ve got one tool. You can’t do two things at once. So at what pace do you move? It’s a very challenging situation.”
Complicating matters further, several key government statistics remain delayed or incomplete following the recent shutdown, giving officials fewer reliable data points as they form their rate expectations. That information gap adds another layer of uncertainty to an already divided committee.
Still, it’s important to remember that the dot plot is simply guidance anchored to a particular moment in time, not a predetermined path. For savers, the takeaway isn’t that rates will rise or fall by a specific amount next year, but that the Fed itself is far from aligned on what comes next—making the trajectory of deposit yields hard to predict.
Why High-Yield Savings and CDs Still Make Sense Right Now
With the Fed trimming rates again, savings and CD yields are likely to ease from here. But that doesn’t mean the window for strong returns has closed. Deposit rates typically adjust gradually, and today’s levels remain far higher than what savers could earn during much of the past decade.
At the moment, the best high-yield savings accounts pay between 4.15% and 5.00% APY, offering competitive returns while keeping cash fully flexible. Meanwhile, the best nationwide CDs reach up to 4.50%, with longer terms letting you lock in multi-year returns of 4% or more. Those fixed rates can be especially appealing now, given the uncertainty around how policymakers will navigate rate policy in 2026.
Tip
Many banks and credit unions won’t adjust savings and CD rates until Monday, so acting now can help you lock in a stronger yield.
Even with a mild downward trend ahead, today’s savings and CD yields stand out by historical standards, giving savers a rare chance to earn meaningful, low-risk returns on cash as the interest-rate landscape shifts toward 2026.
