The Federal Reserve just held off on another interest-rate hike, and the race is on for people trying to get the tip-top yields on their cash.
In recent decades, the first Fed rate cut has typically occurred around seven months after a pause, he said. “But this is not a typical cycle” of tightening and loosening rates, Alemán quickly added. Nearly four in 10 people said they have more cash in their portfolio since interest rates started increasing, according to an American Association of Individual Investors poll of its members last month. The shift to cash was the most cited asset allocation change, the survey showed.
Banks will reduce their deposit rates as soon as they are convinced for sure that the Fed is through with rate increases, Tumin said. They may even reduce their deposit rates before the first cut, he noted. Does September’s pause predict a cut? Not necessarily. Though the Fed is sticking at its current benchmark rate, one big plot line Wednesday was its estimations for where interest rates go next.