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3 things to do before the first Fed meeting of 2024

The Fed could lower its benchmark rate in 2024 so it's important to be prepared.  Getty Images

The Federal Reserve held its last meeting of the year in early December, when it opted to keep rates paused for the third consecutive time. The Fed also indicated that rate cuts could be coming in 2024, which would mark the end of a long period of rate hikes designed to fight inflation. 

If economic trends continue as expected, rate cuts of up to 0.75% are expected in 2024, though it isn't clear when those rate cuts could happen. With the first Fed meeting of 2024 scheduled for the end of January, here's what you should do before that meeting occurs.

Find the right high-yield savings account for you online now

3 things to do before the first Fed meeting of 2024

With rate cuts likely to come in 2024, there are a few ways to take advantage of today's high-interest rates environment while you still can.

Open a CD 

Interest rates for certificates of deposit (CD) are high right now, meaning you can earn significant interest with virtually no risk. For instance, you can find 1-year CDs offering rates as high as 5.75%, 3-year CDs with rates as high as 5.50% and 5-year CDs with interest rates as high as 5.25%. Those rates would likely come down if the Fed chooses to cut the federal funds rate.

If you have money to put into CDs, this would also be a good time to create a CD ladder. This is done by opening a series of CDs with increasing term lengths. And, with CDs, your rate is locked in when you open the account. So, even if rates are slashed significantly, the rate on your CD account stays the same throughout the full CD term. 

"Now is a better time than any, and it may be worth considering laddering your CDs across different maturities such as 6, 12, 18, and 24 months to take advantage of these high rates and lock them in permanently for the next few months or years," says Nick Covyeau, a financial advisor with Swell Financial Partners.

Shop for the best CDs available to you online today.

Open a high-yield savings account

Opening a high-yield savings account also makes sense before the Fed potentially cuts rates next year. Right now, you can also get a good interest rate on a high-yield savings account. Some accounts offer up to 5.50% depending on where you look. But the rates on these accounts may also drop if the Fed cuts rates next year.

And, rates on high-yield savings accounts are variable, so once your bank cuts rates, your account will have a lower rate and you'll earn less interest. If you open an account now, though, you'll earn interest at today's high rates until the bank changes the rates it offers on these accounts. 

Start shopping for a mortgage 

Mortgage rates are high right now, but they have gone down significantly in the past few months. Rates may decline even more if the Fed lowers its benchmark rate, but it's unclear if or when that may happen. For this reason, it could make sense to shop for a mortgage now if you're planning to buy a home soon. Mortgage rates have been moving in the right direction, so it could benefit you to start looking at your loan options now.

The bottom line

In January, the Fed will meet for the first time in 2024. While it may not happen at the first meeting, the Fed has suggested that rate cuts could occur at some point next year. And, there's a chance that these cuts could happen early in the year, so there are a few things you should do to prepare, including opening a CD and a high-yield savings account. It may also make sense to start shopping for mortgages now, as rates have already started to head downward.

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