Money Market Funds Face Yield Decline as Fed Rate Cuts Loom
Money market funds hit a record $7.8 trillion in assets, but strategists warn yields will drop as the Fed cuts rates, with forecasts showing declines through 2026.
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Money market funds hit a record $7.8 trillion in assets, but strategists warn yields will drop as the Fed cuts rates, with forecasts showing declines through 2026.
New York Fed President John Williams said monetary policy is well positioned and sees no near-term reason to cut rates, while the Fed faces legal threats to its independence.
The Federal Reserve implemented rate cuts in 2025, facing public criticism from President Trump, who removed a Fed governor. Fed Chair Powell announced a criminal investigation into his testimony, linking it to political pressure.
High-yield savings accounts and certificates of deposit provide higher interest than traditional savings, with differences in flexibility and terms.
The national average savings rate is 0.39%, but some banks offer up to 4% APY, significantly impacting potential earnings.
The Federal Reserve cut rates three times in 2025, making now a critical time to lock in competitive CD rates before further declines. Marcus by Goldman Sachs offers the highest rate at 4% APY on a 1-year CD as of January 10, 2026.
Money market account rates have fallen over two years, with national average at 0.58% but some accounts offering over 4% APY. A $10,000 deposit at average rate yields $58.17 interest annually.