Will the Fed Cut Interest Rates? Here's What Could Change Later Today

The Federal Open Market Committee (FOMC) began its two-day meeting Tuesday, with a decision scheduled for Wednesday at 2 p.m. ET. Fed Chair Jerome Powell will speak shortly after.

Right now, markets largely expect the Fed to hold rates steady.

No predictions are guaranteed, but the CME FedWatch Tool currently reports that interest rates will remain unchanged with around 99% confidence.

What could happen

There are really three outcomes to watch.

1. The Fed holds rates steady (most likely)

This would signal patience. The Fed would essentially be saying, "We're close, but not close enough yet."

What it means: Savings rates stay where they are or drop slightly. Credit card APRs and loan rates stay put too.

2. The Fed signals cuts are coming

Even without a rate cut, small changes in wording can move markets. Watch for phrases like:

• "Progress on inflation"
• "Greater confidence"
• Any shift in tone from previous meetings

What it means: Markets may react immediately, even before rates actually change.

3. A surprise move

A surprise cut or hike isn't expected, but it would carry the biggest impact.

What it means: Sharp swings in stocks, bond yields, and borrowing costs.

What this means for your money right now

Savings accounts

Top high-yield savings accounts are still offering around 4.00% or more, far above the national average.

If the Fed starts signaling cuts, those rates likely start drifting down later this year.

Credit cards

Average APRs for the best credit cards are still north of 20%.

Even if the Fed cuts rates later in the year, relief here tends to come slowly.

Mortgages and loans

These are already forward-looking. That means rates can move before the Fed actually does anything, based purely on expectations.

The Fed doesn't directly set most of these rates, but it sets the direction for all of them.

What to watch in Powell's press conference

The official statement matters, but the real signal usually comes when Powell starts talking. Pay attention to:

• How confident he sounds about inflation coming down
• Whether he hints at a timeline for cuts
• Any shift in tone compared to the last meeting

If the statement tells you what happened, then the press conference tells you what's coming.

What happens after the decision

If there's one takeaway ahead of today's decision, it's this: Don't wait for the Fed to act before you do.

• If your savings is sitting in a low-rate account, it's never too late to open a high-yield savings account. See all our top picks here.
• If you're carrying high-interest debt, those rates aren't dropping overnight. Focus on paying this down, and maybe check out a balance transfer card that can give you close to two years of breathing room with no interest.
• If you're thinking about locking in yields, this may be one of the last windows to do it at current levels.

You don't need to predict the Fed, just position yourself well for whatever happens next.