Look for Higher Savings/MMA Rates After FOMC’s June or September Meeting
CD rates heading lower. Some financial institutions have increased deposit rates this past year but the majority won't until the Federal Reserve increases interest rates.
The Federal Open Market Committee is laying the groundwork for increasing their key-benchmark interest rate, the federal funds rate. The increase will likely come right after the FOMC's scheduled June or September 2015 meeting. You can see the entire 2015 meeting calendar: FOMC 2015 Meeting Calendar.
The FOMC Chairwomen, Janet Yellen, testified before Congress last week and said they can still be patient before increasing rates. Yellen also told Congress an increase in rates isn’t likely for the next couple of meetings but a near majority of Fed officials believe otherwise.
Seven of the FOMC's 17 members believe and increase in the rate might be warranted in the June meeting. An indication on whether or not that is likely will depend if the language of "being patient" on rates is removed in the April meeting.
Exactly when the fed funds rate is increased is still an unanswered question. We believe the June meeting will be the liftoff date. The gap between the June and September meeting is too long to wait before increasing the rate.
Granted, the FOMC could increase rates between meetings but that is unlikely. An increase in the rate between meetings would surprise markets in a negative way. It would also seem like the FOMC is already behind the curve on increasing the rate, the wrong message to send.
Therefore you should position your finances for higher rates. Any certificates of deposit maturing should be rolled over into short term CDs of 3 to 6 months. If you're thinking about buying a home lock in a mortgage rate sooner than later. Likewise if you're refinancing do it before its to late.
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