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- The next Fed meeting is on December 17-18; this will be the last meeting scheduled for this year.
- The Fed has meetings to assess economic conditions and see if there need to be changes to monetary policy.
- The Fed will likely drop the federal funds rate in December, according to the CME FedWatch Tool.
The Federal Open Market Committee (FOMC) is responsible for making decisions about monetary policy by managing open market operations. It holds eight meetings annually, and one of the primary topics discussed is the federal funds rate.
When the Fed makes changes to the federal funds rate, it can greatly impact different banking products, like savings accounts, loans, mortgages, and credit cards.
You can learn more about the FOMC and what to expect from the next meeting on December 17 and 18 below. We also cover whether savings account rates will drop soon.
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Overview of Federal Reserve meetings
Purpose of the meeting
The purpose of FOMC meetings is for the Committee to assess current economic conditions and figure out how they can achieve and maintain maximum employment, price stability, and long-term interest rates.
If the FOMC wants to make changes to monetary policy, it will adjust the federal funds rate. For example, the FOMC began raising rates in the last few years to fight inflation. During the pandemic, the FOMC also cut rates to help stimulate the economy.
As a consumer, you'll see that changes to the federal funds rate impact banking products. When the Federal Reserve raises rates, the rates on savings accounts, loans, and mortgages also rise. This means you can accumulate more interest on savings, but it becomes more costly to borrow. If the Federal Reserve cuts rates, the rates on savings accounts, loans, and mortgages usually drop. Hence, it's less costly to borrow, but you won't earn as much interest on your savings.
How often they occur, and who attends
The FOMC has eight scheduled meetings each year. If they need to hold additional meetings, they can add more meetings during the year.
The FOMC has 12 members. It consists of all the Board of Governors members, the Federal Reserve Bank of New York president, and four other Reserve Bank presidents (they serve a one-year term, and then alternate with the remaining Reserve Bank presidents).
All FOMC members must attend meetings. All the Reserve Bank presidents also attend. If Reserve Bank presidents aren't on the Committee, they can't vote, though.
Schedule of upcoming Fed meetings
The FOMC holds eight meetings a year that occur over a span of two days. Here is a schedule of all the 2024 FOMC meetings:
- January 30 and 31
- March 19 and 20
- April 30 and May 1
- June 11 and 12
- July 30 and 31
- September 17 and 18
- November 6 and 7
- December 17 and 18
The minutes of each FOMC meeting are available on the Federal Reserve website after the meeting is held. The FOMC also typically releases a statement and holds a press conference on the second day of the meeting.
What to expect from the next Fed meeting
According to the CME FedWatch Tool, there's over a 60% chance that the Fed will drop rates by 25 basis points at its December 17 to 18 meeting.
This comes after the Fed made another interest rate cut in November, lowering its rates by 25 basis points. This also follows a trend set by the Fed's September meeting, when the Fed cut rates by 50 basis points. Before September, the Fed kept rates steady for 2024, neither raising nor lowering them in 2024. The Fed hadn't cut rates since early 2020.
But future rate cuts might be impacted by Donald Trump winning the presidential election, given his plans to enact high tariffs.
The Federal Reserve press release posted on November 7 says, "In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective."
Since the Fed dropped interest rates this week, national savings rates are also likely to drop. Mortgage rates might not drop in the near future, though, despite Fed rate cuts.
Will savings rates drop after the December Fed meeting?
It's likely that national savings rates will drop after the next Fed meeting.
Banks each have individual criteria for savings rate changes, but many are indirectly impacted by the Fed's decisions. Hence, we're likely to see banks lower their savings, money market, and CD rates in December.
What happens to savings rates when the Fed drops interest rates?
The Federal Reserve raised the federal funds rate several times in 2023 to combat inflation, which is why savings rates are still high despite the Fed cutting its rates.
If the Fed cuts rates at the next meeting, savings and CD rates will likely get less competitive. Financial planners have strategies to maintain high interest on saving accounts when rates drop, though.
According to the CME FedWatch Tool, there's over a 60% chance that the Fed will drop rates at its December 17-18 meeting. A rate hike isn't probable.
How high will savings rates go in 2024?
In early to mid-2024, savings rates fell slightly but overall remained around the same.
The average savings account interest rate is 0.46% APY (Annual Percentage Yield), according to the FDIC. However, it's also important to point out that many online financial institutions have much higher savings rates than the national average. The best savings account interest rates pay well above 4% APY right now.
As we come to the end of 2024, savings rates are likely to fall more steeply. According to the Federal Reserve's Summary of Economic Projections, savings rates are likely to continue to fall well into 2026, with a median Federal Funds Rate projection of 2.9% by 2026. Federal Reserve Board members' median projections through 2024, 2025, and 2026 have fallen since their last projection in June.
Is now a good time to open a high-yield savings account?
High-yield savings account rates are falling compared to the high rates of early 2024, but it could be a good time to open a high-yield savings account if you want to open a new bank account for emergency savings or save for a short-term goal. High-yield savings accounts pay more interest than traditional savings accounts at brick-and-mortar banks.
Keep in mind high-yield savings accounts have a variable interest rate. This means the rate will fluctuate over time. If you're looking for a bank account that offers a fixed interest rate, the best CDs allow you to lock in a high rate for a specific timeframe.
Fed meeting FAQs
The next Fed meeting is taking place on December 17-18. There are eight meetings scheduled annually, and this will be the eighth.
The Fed has a press conference that's available to watch on the Federal Reserve website after the meeting takes place. The Fed will also release a statement and minutes after the meeting is held.
If the Fed raises interest rates, interest rates on banking products will likely be impacted. It becomes more costly to borrow as mortgage rates rise. But it also allows you to earn more interest on savings accounts.
The Fed's decision can influence whether the stock market goes up or down. If the Fed raises rates, the stock market tends to drop. If the Fed cuts rates, the stock market can go up.
The Fed's decisions can impact outcomes in global markets. When the Fed changes the federal funds rate, it can impact foreign exchange rates.
