3 moves savers should make ahead of the upcoming inflation report


The upcoming inflation report could have an impact on where interest rates are headed next. 

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The U.S. inflation report is scheduled to be released this week, and depending on what it shows, the new inflation data could have a big impact on the economy. After all, inflation plays a significant role in the decisions that the Federal Reserve makes regarding interest rates — which are currently paused at a 23-year high

When prices grow too quickly, the Fed will typically increase its federal funds rate to discourage spending — a move that typically drives up the cost of borrowing and returns on savings. When prices aren’t growing as fast as they should, the Fed generally reduces interest rates, which drives down the cost of borrowing and returns on savings. 

In turn, the upcoming inflation report could set the stage for changes to monetary policy that could have an impact on your financial well-being. But what should savers do, in particular, to prepare for the upcoming inflation report?

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3 moves savers should make ahead of the upcoming inflation report

Here’s what savers should do to prepare for the upcoming inflation report: 

Open a CD and lock in today’s rate

The Fed paused rate hikes late last year and rates remain paused today. However, most experts expect the Fed to start dropping rates mid-year. 

Should the new inflation data show a downward trend, financial institutions could start reducing their certificate of deposit (CD) rates in anticipation of the Federal Reserve’s next moves. So, locking in today’s high CD returns may prove advantageous, as you’ll continue to earn that same rate for the full CD term, no matter what happens with the wider rate environment during that time. 

But there is one caveat to consider. When you open a CD, you typically agree to leave your money in the account until it matures. In turn, you may have to pay an early withdrawal penalty to access your funds before the CD term is over. So, it’s important to ensure that you can leave your money untouched in the account to avoid those penalties.

Still, an early withdrawal penalty can be an advantage in some cases. For example, agreeing to keep your money in the account for its entire term can help you achieve your savings goals. 

Lock in today’s high returns with a CD now. 

Open a high-yield savings account

Keeping all of your savings in a CD may not be the best approach. After all, you should maintain an emergency fund that you can tap into if you fall on hard times, and CD access is limited. High-yield savings accounts, on the other hand, offer access to your funds and high interest rates on your money. 

Traditional savings accounts currently have average returns of 0.46%, but high-yield savings accounts currently offer rates that are much higher on average. That’s important because your money needs to keep pace with or surpass the inflation rate (currently 3.1%) or it loses buying power. 

As such, it makes sense to tap into today’s high savings rates to earn a meaningful return as long as you can. Just note, though, that the rates on high-yield savings accounts are variable, meaning that they can change over time due to shifts in the wider rate environment. But even if rates trend down in the future, by opening a high-yield savings account now, you will start earning a meaningful return on your high-yield savings account right away.  

Add gold to your portfolio

The inflation rate has been cooling and many experts expect it to continue to drop over time. But, if those expectations are incorrect and inflation comes in hotter than expected on the upcoming report, gold could be a valuable asset to own. 

And that’s due, in large part, to gold’s unique inflation-hedging qualities and other unique benefits. For example, the value of the dollar can decline during periods of high inflation, so investors tend to turn to assets that can act as a safe haven for their money — which gold can do. As such, when inflation rates are high, the demand for gold typically ticks up — sending its price up as well.

Open a high-yield savings account now to maximize returns on your savings. 

The bottom line

With new inflation data expected to be released this week, there are a few moves you can make beforehand to help maximize and protect your savings. For starters, it may benefit you to open a CD and lock in a high rate or maximize your returns with a high-yield savings account for your emergency savings. And, it may be wise to invest some of your savings in gold to take advantage of any potential gains — just in case inflation comes in higher than expected again. 


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