Will Trump’s Tariffs Push Savings and CD Rates Lower? Or Higher?

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The No. 1 Factor Impacting Bank Rates

The Federal Reserve’s benchmark interest rate, the federal funds rate, can be raised and lowered by the central bank to both fight inflation and manage the economy’s growth. This rate is important to everyday savers because it directly influences the interest rates that banks and credit unions pay on savings and money market accounts, as well as certificates of deposit (CDs).

In 2022-2023, the Federal Reserve raised the federal funds rate to its highest level in two decades to fight post-pandemic inflation. That in turn raised savings and CD rates to their highest levels in 20-plus years.

Since then, bank deposit rates have come down some, as the Fed began lowering its benchmark rate in late 2024—with three cuts last fall totaling one percentage point. But the central bankers have put further rate moves on ice so far this year, leaving the best savings accounts and the leading CDs still paying very high rates in the mid-4% range.

Where Are Rates Headed? It Depends on Who You Ask.

What the Fed Is Signaling

At its mid-March meeting, the Fed rate-setting committee released its forecast for 2025 rate moves. At that time, its median prediction was that it would cut the benchmark rate by 0.50 percentage points—most likely in two quarter-point reductions—by the end of this calendar year.

The Fed won’t release another forecast like this until mid-June, but in comments made Friday, two days after President Trump’s tariff announcement, Fed Chair Jerome Powell made it clear that the Fed is still in wait-and-see mode.

“What we’ve learned is that the tariffs are higher than anticipated, higher than almost all forecasters predicted,” Powell said. “We still don’t know where that comes to rest, though, and we’re just going to have to see that through.”

He added: “It feels like we don’t need to be in a hurry. It’s not clear to me at this time what the appropriate path for monetary policy will be.”

Other Economic Players Are Mixed on Their Forecasts

At any given moment, you can look up the probabilities that interest-rate traders are pricing into the market on various rate scenarios. As shown in the CME Group’s FedWatch Tool at the time of this writing, the odds are currently 35% that we’ll see four cuts in 2025, totaling a full percentage point reduction, while traders are pricing in a 11% probability that we’ll see three cuts.

Most of the remaining probability falls into the “five or more cuts” bucket, with 38% odds on the combination of those outcomes.

The probability of three or more cuts this calendar year has grown in the past few days. The thinking is that Trump’s dramatic tariff announcement has raised the likelihood of a recession, and if that occurs, the Fed will be pushed to cut rates further and faster than it previously predicted.

On Monday, Goldman Sachs analysts raised the investment bank’s calculated odds of a recession in the next year to 45%, up from 35%, due to a “sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty that is likely to depress capital spending by more than we had previously assumed.”

But not everyone agrees. Most notably, Larry Fink, CEO of investment giant BlackRock, believes it’s possible for things to go the other way. During an interview Monday at the Economic Club of New York, Fink suggested tariffs could reignite inflation and push the Fed to raise, not lower, interest rates.

“This notion that the Federal Reserve’s gonna … ease four times this year, I see zero chance of that,” Fink said, according to a Bloomberg video of the event. “I’m much more worried that we could have elevated inflation that’s gonna bring rates up much higher than they are today.”

What This Means for Savings and CD Rates

It’s impossible to know how the Fed will act in the coming months and the rest of 2025. And that means we can’t know how banks’ and credit unions’ consumer rates will be impacted. Until more clarity arrives on the Trump tariffs—namely, what the final tariff rates will be and how countries will potentially retaliate—predictions for the economic road forward will remain murky.

If you are inclined to lock funds into a CD, now is still a good time, as rates are high and you’ll be securing a guaranteed rate that can’t change—no matter what happens with tariffs and the Fed. While it’s true interest rates could hold steady for a long time, or even rise, the odds currently favor some reduction this year. As always, however, only time will tell.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.

Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.