It’s clear that while inflation is improving, the Fed’s job isn’t done.

“It has been more than a decade since we have seen rates this high.”

Since early 2022, the Federal Reserve has been working to temper rising prices and tame runaway inflation.

From groceries to gas,everyday essentialshave gone up in cost.

In response, the Fed has aggressively raised interest rates to make a run at bring down prices.

However, this has also led to increased interest rates forsavings,certificates of depositandmoney market accounts.

What’s going on with inflation?

Inflation now sits at 5% year over year, according to theBureau of Labor Statistics.

One of the Fed’s responsibilities is to keep inflation low, ideally around 2%.

What another rate hike means for the economy

Prices won’t drop overnight.

The Fed acknowledges the adverse effects and potential risks of this restrictive monetary policy.

And at this point, a recession seems unavoidable.

“Still, there’s risk of some pain resulting from this slowdown.”

“The Fed rate hike can lead to higher returns on savings accounts.

That is the positive side of the equation,” said McClary.

“The bad news is associated with the impact on the cost of borrowing.

If you owe, you will pay more.”

Higher rates also make it more expensive to refinance your mortgage orstudent loans.

“And also communicate with your family because very few of us operate in an economy of one.”

Consider transferring outstanding high-interest debt to a lower or fixed interest rate option, if possible, she said.

Check whether your debt carries a fixed or variable interest rate.

It just might mean that it’s not going up," said Rebell.

Don’t wait to take action.

Some traditional savings accounts haven’t kept up with inflation, and you may be missing out on interest.

Savings account annual percentage rates have increased significantly this year, with many topping 5% APY.

But savings and CD rates will soon reach a plateau.

Still, that doesn’t mean you should move all your money out of a savings account.

Even if rates begin to dip, building up youremergency fundis crucial.

The most important advice is to shop around and compare rates before opening a new bank account.

“Rates on CDs, in particular, can vary widely,” said Wu.