How much higher will the Fed raise rates?

For U.S. savers, what a difference three years can make. Back in December 2015, the Federal Reserve hiked interest rates for the first time since the Great Recession in 2008, finally taking an upward step out of a seven-year valley of near-zero rates.

Fast forward to this December, and the Fed has now made eight additional increases, announcing the latest one last week. The Federal Funds Target Rate now sits 2.25 percentage points above its 2015 level.

This matters to cash savers because savings, money market and certificate of deposit rates are correlated with the Fed’s rate. While any single rate bump might not move the needle across the entire banking industry, this three-year period of nine hikes has driven up rates throughout the deposit accounts market.

But is the Fed finished, or will it hike rates higher still? There is never a reliable crystal ball for this question, as the Fed’s rate-setting committee holds sole responsibility for that decision, and privately meets to determine a verdict every 6-8 weeks. But with each new decision, they submit a written projection for the future, and currently, they’re signaling that we may see two more bumps in 2019.

This information matters particularly to CD savers, since they lock into a rate for the future. As a result, opening a new CD right before a rate hike is announced can be disappointing. On the other hand, savings and money market funds can spontaneously benefit from any number of increases, but at the expense of lower-than-CD rates.

The Fed’s forecast last week of two more hikes in 2019 is a slight downgrade from its previous prediction of three increases next year. But still it suggests that the rising tide cash savers have been enjoying may still have some swell in it.