Fed Rates Set to Fall: What to Do Now

After a year of holding steady, the Federal Reserve looks poised to cut interest rates, possibly multiple times before 2025 is out. For everyday investors and savers, that looming policy shift brings both opportunity and risk—depending which side of the borrower-saver line you stand on.

However, the real losers in a rate-cutting environment are savers. As rates slide, savings accounts, CDs, money market funds, and T-bills will offer less yield than today—even as inflation and daily costs remain elevated. As the article notes, locking in longer-term CD rates now could be the smart move for those hoping to protect their returns.

As I shared with MarketWatch, the instinct to chase higher yield or take on more investment risk can be strong as cash yields shrink—but that’s rarely a wise response. “Don’t take on more risk than you can handle just to make up for shrinking cash yields—stay rooted in your financial plan,” I advised in the piece. For borrowers, reviewing your loan rates is smart, but be realistic—those with fixed-rate loans may not see immediate relief, and big changes won’t happen overnight.

Perhaps most importantly, the article reminds readers that a rate cut isn’t an all-clear signal for the broader economy. Rate cuts may reflect the Fed’s concern about slowing growth, softer employment, or deeper credit risks—reasons to remain prudent, not overconfident. Experts, myself included, suggest keeping your emergency fund topped up, sticking to a disciplined investment plan, and not making rash portfolio changes based on news headlines or short-term policy changes.

Bottom line:

Fed cuts will offer some new opportunities for borrowers, and hurdles for savers, but they don’t change the fundamentals. Stay calm, avoid knee-jerk financial moves, and keep your plan grounded in long-term discipline—no matter where interest rates land.