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Federal Reserve updates including rates, news and forecasts

July 30, 2015

| MoneyRates.com Senior Financial Analyst, CFA

The July 29 statement from the Federal Open Market Committee made this week's Federal Reserve meeting the latest in a growing series of non-events from the central bank. While Fed meetings continue to attract ample media attention, beleaguered deposit customers would do well to look beyond the Fed for signs of life from savings account rates.

The Fed signals a preference for following rather than leading

The Fed's statement said that while employment and inflation have shown improvement, they would have to do even better before the Fed would feel comfortable raising rates. This is a little bit curious, since employment has recovered from the job losses resulting from the last recession and is now at an all-time high, while inflation in recent months has been running above the Fed's 2 percent target.

Janet Yellen's Fed has exhibited a persistent concern with not wanting to upset the financial markets. Increasingly though, this worry seems to go beyond wanting to break the news of policy changes gently to the point of reluctance to make any news at all.

The preference of today's Fed to follow rather than lead the financial markets is not unprecedented. The more assertive role the Fed took under former chairman Ben Bernanke was perhaps forced by the fact that the markets were thrown into chaos by the financial crisis. Now Janet Yellen's Fed has shown a hesitancy to upset the status quo, which means depositors will have to look elsewhere for signals of improvement in bank rates.

Where to look for signs of change

If the Fed is hesitant to be the agent of change for interest rates, how can you tell when rates are ready to start rising?

Here are two things to keep an eye on:

  1. The Treasury bond market. Bond traders are paid to anticipate economic events, and Treasuries are the purest reflection of general interest rate trends because their prices are not affected by issuer-specific events the way corporate bonds might be. Be advised that bond markets fluctuate up and down daily, so don't try to extrapolate a trend from every short-term zig and zag. Focus on significant, month-over-month changes, and you will get an early sign of when rates are making sustained moves.
  2. The market for bank rates. Monitoring competing certificate of deposit, money market account and savings rates will tell you quickly when individual banks start deciding to move rates higher. After all, the leaders are going to move well in advance of the vast population of banks. In any case, you don't need the overall average to move before you can improve your rates - you only need to spot a leader making a better offer.

Anticipating changes in interest rates is important for financial decisions such as when to refinance a mortgage or move money from a savings account to a long-term CD account. Since the Fed seems hesitant to lead the markets, keeping your eye on the markets themselves is your best chance of anticipating interest rate trends.

More from MoneyRates.com:

About the Federal Reserve

The Federal Reserve serves as the central bank of the United States. It was founded in 1913 by Congress for the purpose of strengthening the nation’s financial and monetary stability. Today, the Fed serves several duties in the nation’s economy.

These roles include regulating financial institutions, seeking to foster prosperity in the financial market, providing services to financial institutions, and influencing credit and monetary conditions for the purpose of a stable economy.

The Federal Open Market Committee (FOMC) meets several times each year and steers many key parts of Federal Reserve policy, including guiding the target range of the federal funds rate. The committee consists of 12 members.

Federal Reserve policy options

Options the Federal Reserve has for manipulating the economy include:

  • Altering the federal funds rate target
  • Altering the discount rate and its spread from the federal funds rate
  • Making open-market purchases of mortgages securities and Treasury bonds
  • Revising the language in the Fed's official statement to extend the period of time that interest rates are anticipated to be low
  • Increasing the money supply

Federal Reserve Links

The Federal Reserve Board

Members of the Federal Reserve Board of Governors

Speeches and Testimony by Federal Reserve Board Members

Statistics: Releases and Historical Data

Federal Reserve Bank Chicago

Federal Reserve Bank New York

Historical interest rate changes

Previous Federal Reserve Updates

Fed implies rise in interest rates is inevitable

Fed sets the stage for rate hike

Fed ups the focus on its June meeting

Latest Fed statement omits important detail

Fed changes its language, but not its policy

Fed's concerns remain with low inflation -- not low rates

A slow turn in Fed policy

Fed cheers quickening growth and inflation

Brightening economic signals fail to move Fed

The Fed announces another lose-lose for consumers

Is Janet Yellen really a hawk?

Fed forges ahead with tapering

Fed tapering: a win for banks, but not consumers

Fed moves predictably through enigmatic economy

Steady as she goes: Fed maintains its course

Fed remains mum on tapering

Like the economy, the Fed is still treading water

4 questions the Fed statement didn't answer

Is the Fed hinting at its exit strategy?

Fed meeting overshadowed by GDP disappointment

Fed ignores fiscal cliff, conducts business as usual

Fed plays the waiting game

More of the same medicine from the Fed

Fed meeting brings no miracle cure from Dr. Bernanke

The Fed's latest bet: I'll have another

Federal Reserve update: April 2012

Federal Reserve update: March 2012

Federal Reserve update: January 2012

Federal Reserve update: December 2011

Federal Reserve update: November 2011

Federal Reserve update: September 2011

Your responses to ‘Federal Reserve updates including rates, news and forecasts’

Showing 7 comments | Add your comment
Tom

24 May 2013 at 8:16 am

If all your income is in a FDIC account at a bank because you are not stock market savvy and you aren’t earning anything on interest then you can’t spend and recoup so you stagnate. Having to use your savings up leaves you with nothing, hello medicaid and public assistance.

josephine budka

11 April 2013 at 2:57 pm

I see the stock market and the real estate improving every day Why do we see these ridiculous rates our IRA and CD's Will the rates be improving soon or do we have to put our money into stock market.

Wayne

26 April 2012 at 9:20 am

What about earning some interest on my savings? Retirement looms ... maybe ... Help!

glenn smith

20 March 2012 at 1:34 pm

If people think that rates are going to go up, they will step up purchases of houses. This is what Obama wants: a housing upturn. As long as the Fed says rates will stay low until 2014 we will have no movement in housing and other investment. People will fear that they will miss the "low" in housing prices so they will buy now - if they fear that rates are going to go up!

Home Buyer

2 October 2011 at 10:28 pm

Thanks so much for helping make this info available. I'm thinking about buying a home but I think I'm gonna wait.

Gregory Matthew

1 June 2011 at 4:37 am

whoah this blog is excellent i really like studying your posts. Stay up the good work! You recognize, many individuals are looking round for this info, you can help them greatly.

Antique Clock

1 June 2011 at 3:07 am

Yeah, the Federal wanted to raise the discount rate to at least 1.25% because of many reasons. This has always been a huge debate and desire of others. Best wishes, Rocky

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