Tyler Schipper, associate professor of economics at the University of St. Thomas College of Arts and Sciences, recently spoke with CBS News about projections for savings account interest rates this summer.
From the story:
Expert consensus increasingly leans toward the Fed pausing interest rates this summer as it waits for more consistent data pointing to cooling inflation. Accordingly, savings rates could remain at high levels.
For example, the latest average savings rate is 0.45%, according to the FDIC, which includes paltry rates for traditional savings accounts at major nationwide banks. However, credit unions, some banks and many online banks offer substantially higher yields on high-yield savings accounts, ranging from 4.25% to 5.25% or higher on average.
Given the significant disparity in rates, Tyler Schipper, associate professor of economics at the University of St. Thomas, notes that future rate cuts might not be as noticeable at large commercial banks as with online banks.
“The odds are against the Federal Reserve cutting interest rates this summer, barring a series of remarkably good inflation prints,” says Schipper. “And bank lending has grown slowly in 2024 – roughly half of its pre-pandemic rate. If rates do start to fall, it will only be noticeable at certain banks, mainly online banks, or in certain types of accounts, such as high-yield savings accounts and certificates of deposit (CDs). The largest banks only offer anemic interest rates on their traditional savings accounts, so there will be little movement there regardless.”
