ROCHESTER, N.Y. – Inflation can actually work in our favor when it comes to saving money, according to financial experts. The latest inflation report shows prices ticked up for the third straight month, making it unlikely the Federal Reserve will cut interest rates at their upcoming meeting.

While high interest rates are bad news if you want to borrow money, they are great for savers. Greg McBride, Chief Financial Analyst at Bankrate, explains why inflation is important for safe-haven investments.

“Inflation is your measuring stick when you’re talking about money in your safe-haven investments. Preserving the buying power. That’s critically important so from that standpoint it will be another positive year for savers,” McBride said.

You want your savings to be earning more interest than the rate of inflation so you have more buying power. High inflation means high interest rates, which in turn means banks will offer savings accounts that earn more interest.

Analysts believe the Federal Reserve will only lower interest rates a couple of times this year due to persistently high inflation. However, McBride says we can all take advantage of those high interest rates by putting our savings in a high-yield savings account.

“Most banks are still paying really low rates, most of the time below one percent on things like savings accounts and CDs. You don’t want to have your money there,” McBride advised. “Seek out the most competitive savings accounts, money markets, and certificates of deposits, those top-yielding offers are still earning well ahead of inflation. And that’s gonna continue through 2025. Though we do expect interest rates to come down a bit more those returns are gonna stay ahead of inflation.”

For example, a regular savings account at many banks has an interest rate of only 0.01%. But banks are offering high-yield savings accounts with interest rates as high as 4.75%.

Here are links to Bankrate and NerdWallet.

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