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- The next Fed meeting is on January 28-29; this will be the first meeting scheduled for the year.
- The Fed has meetings to assess economic conditions and see if there need to be changes to monetary policy.
- The Fed will likely keep the federal funds rate the same in January, 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 January 28 and 29 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, but if Reserve Bank presidents aren't on the Committee, they can't vote.
What economic indicators does the Fed use?
The Fed uses several economic indicators to make its decisions. One of the biggest economic indicators it uses is inflation, specifically the annual change in the price index for personal consumption expenditures, or the PCE. The Fed prefers the PCE over the CPI, also known as the consumer price index, because it says the PCE is more accurate to how Americans spend their money.
Right now, the Fed wants inflation to be at 2%, which means that prices as a whole are 2% higher than they were last year. The inflation rate isn't quite that low yet, but it's close.
The Fed also uses unemployment rates to measure how the economy is doing. In general, the Fed hopes to help keep both inflation and unemployment relatively low through its rate decisions.
Schedule of upcoming Fed meetings
The FOMC holds eight meetings a year that occur over a span of two days. Here is the 2025 FOMC meeting calendar:
- January 28 and 29
- March 18 and 19
- May 6 and 7
- June 17 and 18
- July 29 and 30
- September 16 and 17
- October 28 and 29
- December 9 and 10
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 70% chance that the Fed will keep rates the same at its January 28 to 29 meeting.
This comes after the Fed made another interest rate cut in December, lowering its rates by 25 basis points. The Fed also lowered its rates in September and November of 2024, for a total cut of 100 basis points in 2024. Before that, the Fed hadn't cut its rates since 2020.
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 December 18 says, "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate."
Since the Fed lowered interest rates this week, national savings rates will likely drop as well. Mortgage rates aren't as likely to drop, though, not making it easier to buy a house.
Will savings rates drop after the January Fed meeting?
It's likely that national savings rates will not drop significantly after the next Fed meeting, largely holding steady instead.
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 keep their savings, money market, and CD rates comparable to current rates in January.
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 70% chance that the Fed will keep rates the same at its January 28 to 29 meeting. A rate hike isn't probable.
How high will savings rates go in 2025?
In 2024, savings rates fell compared to 2023 rates but remained relatively high compared to historical CD rates and savings account rates.
The average savings account interest rate is 0.41% APY (Annual Percentage Yield) according to the FDIC. However, 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 start 2025, savings rates are likely to continue falling, but at a slower rate than we've seen during the second half of 2024. According to the Federal Reserve's December Summary of Economic Projections, rates are likely to continue to fall well into 2027. There is a median Federal Funds Rate projection of 3.1% by 2027. This number is up from the Fed's September Summary of Economic Projections, though.
Is now a good time to open a high-yield savings account?
High-yield savings account rates are falling, but it could be a good time to open a high-yield savings account if you want to open a new bank account for an emergency fund or to 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 January 28-29. There are eight meetings scheduled annually, and this will be the first.
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.
