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During a speech this morning at the Federal Reserve Bank of Kansas City’s economic symposium in Jackson Hole, Wyoming, Federal Reserve Chair Jerome Powell addressed the tensions behind the central bank’s upcoming decision on the federal funds rate.
He stopped short of confirming a move, but his comments suggest that the Fed may prepare to cut rates at its September meeting if the economy continues to slow and the labor market weakens.
For savers, that could mean today’s returns on high-yield savings accounts (HYSAs) and certificates of deposit (CDs) won’t last much longer. Locking in rates now may be the best way to capture higher yields before banks lower payouts.
What’s Fueling Rate Cut Speculation?
Powell noted that the U.S. labor market shows signs of fragility: Job growth has slowed noticeably, and the balance between labor supply and demand has narrowed. This kind of “fragile equilibrium” raises concerns that unemployment risks could escalate rapidly, potentially pressuring the Fed to act to stabilize the job market.
Inflation is still exceeding the Fed’s 2% target, with tariffs increasing prices. Powell notes that some of these pressures may prove temporary, but it’s unclear how long they’ll last.
The data suggests the Fed may shift toward a more accommodative stance, keeping close watch on upcoming employment figures before deciding whether to lower the federal funds rate.
Markets React—And Why Timing Matters
Markets responded swiftly to Powell’s speech. U.S. stock indexes rose sharply, signaling investor confidence that rate cuts—possibly as soon as September—are now on the table.
Such expectations carry real implications for savers. When the Fed signals a shift toward lower rates, interest rates on deposit products like HYSAs and CDs typically follow.
A CD is a savings product that locks up your money for a set period in exchange for a fixed interest rate. The longer the term, the higher the rate usually is. You generally can’t touch the money without a penalty until the CD matures, but you’re guaranteed a set return.
If you’re looking to earn as much interest as possible on your cash, locking in one of the best CD rates now may be advantageous ahead of a potential rate cut.
Additionally, a HYSA works like a regular savings account but pays a higher interest rate, so your money grows faster. Your money stays accessible—you can deposit or withdraw at any time—but your rate can change depending on market conditions, especially if the Fed adjusts the federal funds rate. If you prefer easy access to your cash, these are some of the best HYSA options to secure a top rate today.
Should You Lock in a CD or a HYSA Now?
Why you might want to act now:
- Rates could drop soon. If the Fed cuts rates in September, banks and credit unions are likely to reduce yields on deposit products, especially on new CDs and HYSA offers.
- Protect your returns. Locking in a competitive CD rate or opening a HYSA now can help secure a better yield before markets fully adjust.
What to consider:
- Term length and flexibility. CDs typically offer higher yields but tie your money up for a fixed period. If rates continue to fall, future CD renewals may offer even lower returns.
- HYSA trade-offs. HYSAs give savers quick access to cash, but the rates can drop quickly once the Fed cuts rates.
Bottom Line
While Jerome Powell stopped short of committing to a rate cut in September, his remarks at Jackson Hole opened the possibility. With labor markets cooling and inflation pressures mounting, the Fed appears ready to adjust policy if conditions warrant it.
For savers, that makes now a potentially strategic time to lock in yields with CDs or HYSAs before rates begin to decline.