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Federal Reserve holds steady on interest rates
The policy-setting Federal Open Market Committee kept a steady hand on interest rates, sticking to its target range of 4.25% to 4.5%.
The action comes after the policymakers trimmed rates three times in a row last year.
Read about the Fed’s decision from CNBC’s Jeff Cox here.
—Darla Mercado
Where markets stand before the Fed’s decision
With the Fed likely standing pat, it’s time to reassess cash allocations
The Federal Reserve’s moves on interest rates have an effect on what investors earn, particularly on fixed income and cash. Higher rates have led to higher yields on interest-bearing instruments.
To that end, now might be a good time to take a closer look at your cash holdings, said Brandon King, head of personal investor cash at Vanguard.
“From an investment perspective, make sure your cash allocation aligns with your investment goals, time horizon and risk tolerance, rebalancing as needed,” he said.
Investors should also make sure they are maximizing the interest they earn on emergency funds, shopping around for attractive alternatives. “The industry average savings account is offering just 0.41% APY,” he said. “That means you’ll only earn 41 cents annually for every $100 saved.”
Certain high-yield certificates of deposit and savings accounts, as well as money market funds, are offering yields exceeding 4%, and those deals may stick around a little longer as the Fed takes a slower approach on rate cuts.
— Darla Mercado
Here’s what investors are watching as the Fed prepares its decision
As the Federal Reserve readies its rate decision, Chair Jerome Powell’s press conference will likely be the main event of the day.
The Fed is expected to stand pat on interest rates, maintaining its benchmark rate in a target range of 4.25% to 4.50%. Policymakers will issue their decision at 2 p.m. ET.
Powell speaks at 2:30 p.m., and investors will eagerly await further details on the next direction for policy, as well as whether the Fed chair has anything to say in response to President Donald Trump’s call for lower rates.
Though the president has no authority over how the Fed proceeds on policy, he and Powell have butted heads on policy since Trump’s first term in Washington. Just last week, Trump said he would “demand that interest rates drop immediately.”
Read more about what’s ahead for the Fed from CNBC’s Jeff Cox here.
— Darla Mercado
