Today the Federal Reserve met for the second time in 2011 and as was expected, they decided to keep the target federal funds rate at 0 to 0.25 percent. The Fed will also continue buying bonds according to plan.
What does this mean for savings rates, money market rates, and CD rates?
Short term (for the next 6 months), it will be wise to stay away from long term CDs unless the withdrawal penalty is small like Ally Bank’s CDs. That way you won’t be locked into a low rate when rates really start to take off once they are no longer being held down by the Fed.
Money market rates are still dismal but at least your deposits will keep pace with the interest rate market when things begin to heat up.
The Federal Reserve will meet again on April 26-27.
