Savers Can Weather Another Fed Rate Cut

No one has been getting rich stuffing their money into a savings account, and it's bound to get even tougher, as the Federal Reserve shifts further into a rate-cutting mode.

The Federal Reserve announced another rate cut after its two-day policy meeting on Wednesday. A divided Fed lowered its benchmark interest rate by another quarter percentage point to a range of 1.75% to 2% in an effort to stave off a possible recession triggered by a global economic slowdown and the U.S. trade war with China.

But don't expect the Fed to respond to President Donald Trump's latest tweet that suggested the "Fed should get our interest rates down to zero, or less."

Not going to happen next week – or maybe even next year if the economy doesn't tank.

"I expect the Fed to lower the fed funds rate range by 25 basis points on Wednesday," said Robert A. Dye, chief economist at Comerica Bank, before the decision was announced.

The move takes the rate down from the 2% to 2.25% range. The Fed launched its latest round of rate cuts back in late July with a quarter-point cut. July's move was the first rate cut since December 2008.

"Global economic indicators are looking cooler, and I believe that the Fed will continue with its 'risk management' approach through next year," Dye said.

So further rate cuts could be ahead.

Dye's forecast includes another 25 basis-point cut after the Fed two-day policy meeting Dec. 10-11 and another quarter-point cut in June 2020.

After four rate cuts, short-term rates could be down to a range of 1.25% to 1.5% – down a full percentage point from earlier in 2019.

For consumers, the Fed's next rate cut would mean a slight break on the cost of borrowing on credit cards and other loans. But savers are going to be making even less interest on money they're keeping at the bank.

Here's a look at how to get a bit more for your money:

Move your money around

If you want to make more money on your money, you're likely going to have to move some money around.

Rates on some high-yielding savings accounts had been as high as 2.25% just a few months ago. But those rates have been coming down as banks began anticipating a round of rate cuts by the Fed.