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After cutting interest rates three times in 2025, the Fed has held its benchmark rate steady at a range of 3.50% to 3.75%, signaling a more cautious, wait-and-see approach.<\/p>\n
Will these cuts continue into 2026? And if so, how will that impact your bottom line? Here\u2019s what the experts have to say, and what you should do to prepare in the meantime.<\/p>\n
Read more: <\/em>How a Fed rate cut affects your bank accounts, loans, credit cards, and investments<\/em><\/p>\n The federal funds rate is the interest rate at which depository institutions charge each other for ultra-short-term loans, usually overnight. It’s expressed as a range, and financial institutions negotiate a specific rate within that range.<\/p>\n The federal funds rate plays a key role in the Federal Reserve\u2019s management of inflation. When inflation is too high, the Fed typically raises its rate to reduce consumer spending and slow economic activity. Conversely, the Fed may lower its rate to stimulate economic activity and growth.<\/p>\n The federal funds rate doesn\u2019t directly affect the rates offered by individual banks, but it does have an influence. When the Fed\u2019s target rate increases or decreases, rates for high-yield savings accounts, certificates of deposit (CDs), money market accounts, credit cards, home loans, and other banking products generally follow suit.<\/p>\n That means when the Fed\u2019s rate is high, it can be a good time to deposit money in a bank account and earn more interest. When it\u2019s low, it\u2019s a good time to borrow money or refinance at a lower interest rate.<\/p>\n Read more: <\/em>How do banks set their savings account interest rates?<\/em><\/p>\n