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Savings account interest rate forecast for summer 2024: Everything experts predict
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The latest Consumer Price Index report reveals that inflation eased in April to 3.4%, ticking down by 0.1% from March. But despite the positive movement, inflation remains elevated, and the Federal Reserve still has work to do to meet its stated 2% target inflation rate.
At one point in early 2024, economists forecasted an interest rate cut after the Federal Reserve indicated it would cut the rate multiple times this year. These anticipated rate cuts were expected to start mid-year, but stubborn inflation has kept any rate drops on hold so far.
While today’s elevated interest rates are burdening borrowers with higher lending costs, they’re rewarding savings account holders with higher yields. And, given the unusual rate environment, many savers are watching the Fed’s next moves intently to see how the agency’s actions could affect savings account interest rates this summer.
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Savings account interest rate forecast for summer 2024: Everything experts predict
Here’s what the experts anticipate might happen with savings account yields in the coming months.
Savings account interest rates will drop
The Federal Reserve doesn’t directly set savings rates, but yields generally change with Fed decisions, among other factors. As Stephen Kates, CFP and principal financial analyst at Annuity.org, points out, savings rates can drop before the Fed takes action.
“I believe savings rates will fall, but very slowly. This is dependent on monthly inflation prints, which are most likely going to telegraph Federal Reserve interest rate policy. If inflation does not spike and remains stable or falls, then I expect banks to begin preemptively lowering savings and CD rates in anticipation of a Fed rate cut later this year,” Kates says.
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Savings account interest rates will stay the same
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 Schnipper, 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 Schnipper. “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.”
Andrew Herzog, CFP at The Watchman Group, also anticipates savings rates will remain steady this summer.
“The Federal Reserve has five more meetings before Christmas, and I certainly do not expect a rate cut in June, especially after recent Fed minutes indicated worries that inflation was too sticky and not enough progress was being made to achieve the 2% target,” Herzog says. “I see no change this summer because savings interest rates are going to be mostly affected by Fed decisions. Come the end of the year, however, perhaps rates increase all around due to a lack of progress on inflation.”
Savings account interest rates could rise
While Herzog believes saving rates will remain the same, he notes that banks also adjust savings yields according to their need for deposits to lend to their borrowers.
“Savings account interest rates could also increase if banks want to entice new deposits and revitalize consumer spending through the loans they give out,” says Herzog. “Recent news shows some retailers — Amazon, Walmart, Target — slashing prices to entice consumer spending again, so it’s plausible that banks could voluntarily step up savings account rates on their own to rejuvenate the economy and increase their revenue.”
The bottom line
Most experts expect the Fed to continue holding interest rates steady, which could bode well for savings account holders enjoying high yields. If you want to maximize your savings rate, you might consider parking your money in a high-yield savings account. As its name suggests, these accounts earn strong yields but are also highly liquid.
Certificates of deposits (CDs) and bonds may be a better option if you want to lock in today’s rates for the long term. For example, opening a 3- to 5-year CD today could be a wise move if you anticipate rates dropping in the future. Of course, if rates increase, you could miss out on higher yields, so weigh the potential benefits and risks before proceeding.
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Hearing the voice of Sir Laurence Olivier catch you up on work memos may not offer the same thrill as watching the acclaimed English actor on stage or screen, but it could make your morning commute more interesting.
That’s the vision of artificial intelligence startup ElevenLabs, which this week announced that fans of Hollywood icons such as Judy Garland and James Dean can now listen to the voices of the deceased film stars narrate books, articles and other digital text.
The company said it had reached agreements with the estates of Olivier, Garland, Dean and Burt Reynolds to add their voices to a library of AI-generated voices on ElevenLab’s new Reader App. The product lets users listen to text on your phone, with the actors’ voices available for individual streaming.
ElevenLabs did not provide details about any financial compensation it is offering to the actors’ estates.
“We deeply respect their legacy and are honored to have their voices as part of our platform,” Dustin Blank, head of partnerships at ElevenLabs said in a blog post. “Adding them to our growing list of narrators marks a major step forward in our mission of making content accessible in any language and voice.”
Liza Minnelli, Judy Garland’s daughter and the representative of her estate, said in the post that her family is excited to “see our mother’s voice available to the countless millions of people who love her.”
Using AI to recreate a version of someone’s voice has drawn negative attention after being used in nefarious ways, including the creation earlier this year of a phony robocall from President Joe Biden urging people not to vote in New Hampshire’s presidential primary.
In another incident, actress Scarlett Johansson is May said she was “shocked, angered and in disbelief” after discovering that a voice option on OpenAI’s ChatGPT app sounded like her. Johansson had declined OpenAI founder Sam Altman’s offer to voice ChatGPT’s text-to-speech product. Altman said the voice is not Johansson’s.
AI was a key issue in the SAG-AFTRA strike last year. A new actor contract includes limits on artificial intelligence. Producers for TV and film must get consent from actors to use a digital replica, and performers are also entitled to compensation for using AI to create their virtual likeness.
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Candidates in pivotal French legislative elections drop out in tactical move ahead of final vote
Paris – As France prepares for a decisive second-round vote Sunday, political parties from all persuasions are scrambling to secure seats in the National Assembly. However, more than 200 candidates – mostly from left and centrist parties – have dropped out in a tactical move to block the far right.
Marine Le Pen’s far-right National Rally (RN) party and its allies led the first round vote with 33.4%. However, after the significant number of withdrawals to avoid splitting the vote against the far right, it’s unlikely the RN can secure an absolute majority in this second round and form a government.
The RN is anti-immigration and has been accused of being antisemitic and anti-Muslim. It wants to roll back the power of the European Union in France and has threatened to pull the country out of the U.S.-led NATO military alliance.
There are 577 seats in the National Assembly, the lower house of parliament. Just 76 deputies were elected with an outright majority in the first round so the majority of seats are still up for grabs. A total of 289 seats is needed for that crucial absolute majority.
Final opinion polls on Friday predicted the RN and its allies would again lead the field – but would now only secure between 175 and 205 seats, well below the majority needed to form a government on their own, and below predictions in the immediate aftermath of the first round. However, that is more than double the number of seats held before these elections.
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The leftist group, Nouveau Front populaire, or New Popular Front, is predicted to take between 145 and 175 seats. That grouping of traditional left, hard left and green parties was hastily formed after President Emmanuel Macron called snap elections in June.
Macron hoped to rally voters against the far right after the RN did well in early June elections for the European parliament, which governs the European Union.
However, political analyst Douglas Webber told CBS News: “President Macron made a colossal error in judgment”.
His Ensemble – Together – centrist coalition for these parliamentary elections is tipped to win just 145-175 seats.
Polls predict voter turnout for this second round will be as high as 65%. That’s similar to the numbers for the first round on June 30. Turnout was unusually high as many voters said they either wanted to block the far-right, or just get rid of Macron’s government.
“Right now, we have big problems with the right wing,” said one young woman after the first round vote. “We want more democracy, you know, we don’t want people to feel afraid or scared about living in France.”
These elections have been marred by attacks on candidates. The interior ministry said 51 candidates or party activists – from different parties – were attacked during the short campaign. For Sunday’s vote, 30,000 police have been drafted in case of violence during polling or after the results are announced.
Initial predictions will be available shortly after the polls close in France on Sunday night. However, in the absence of an outright majority for one party or grouping, it may be days – or even weeks – before a government emerges.
RN president Jordan Bardella – who wants to be prime minister – has suggested that he would refuse to form a government if his party and allies do not win an outright majority. He argued that without a majority, his government could achieve little and, therefore, would not be worth it. Whether that is simply posturing to encourage all far-right supporters to vote in large numbers remains to be seen.
There is talk of a rainbow coalition of traditional left and right parties and centrists. But Macron made it clear on Wednesday at a meeting with his Council of Ministers, that blocking the far right did not mean that he would name a government led by the hard left LFI – La France Insoumise, or France Unbowed – led by Jean-Luc Melenchon. It remains to be seen if there would be enough deputies without the two extremes to form a government.
There is a third option. President Macron could decide to postpone forming a new government until after the Paris 2024 Olympic Games, which open on July 26. He could ask the current Prime Minister Gabriel Attal to continue in a caretaker role and then deal with the fallout of the elections once the Games are over.
