The Federal Reserve announced that it’s holding interest rates steady following its Dec. 12-13 meeting, leaving the federal funds rate at a target range of 5.25 to 5.5 percent. It’s the fourth time in the last five meetings that the Fed has left rates unchanged, though the central bank has raised rates a total of 11 times during this economic cycle in an effort to tamp down high inflation.

The Fed’s decision comes as inflation dropped to 3.1 percent year-over-year in November, after hitting the highest levels in decades at over 9 percent in mid-2022. The last time the Fed raised rates was at its July meeting. With only one hike in the past five meetings and the rate of inflation moving lower, many Fed watchers believe the Fed could be done increasing rates.

“The Federal Reserve is done raising interest rates in this cycle – even if they won’t actually say that,” says Greg McBride, CFA, Bankrate chief financial analyst. “But this is not to say that interest rate cuts are around the corner. Instead, the Fed will be reluctant to begin cutting rates until we see inflation moving materially closer to 2 percent.”

At about 4.17 percent, the 10-year Treasury note is down substantially from its 52-week high of 4.99 percent, which was hit in October. The yield has plummeted in recent weeks, as the market prices in a slower economy.

Here are the winners and losers from the Fed’s latest decision.

1. Savings accounts and CDs

Flat interest rates mean that many banks are likely to pause (or at least slow) raising returns on their savings, CDs and money market accounts, though some may still be jockeying for position through the use of more-competitive APYs.

“CD yields are as good as they’re going to get and there is no incentive to waiting longer to lock in,” says McBride. “Yields on multi-year maturities – two years through five years – will start easing in the months ahead, while shorter maturities, along with liquid savings and money market accounts, will hold for a while until there is greater visibility on the timing of when the Fed will start cutting rates.”

Savers looking to maximize their earnings from interest should consider turning to online banks or the top credit unions, where rates are typically much better than those offered by traditional banks.

When it comes to CDs, account holders who recently locked in rates will retain those yields for the term of the CD, unless they’re willing to pay a penalty to break it.

With rates likely to be nearing a top, it may be a good time to lock in longer maturities on CDs, especially those in the 2-year to 5-year timeframe while they remain relatively high.

“With the inflation rate easing more in the coming months, the CD yield you lock in today will look even better in 2024,” says McBride.

2. Mortgages

While the federal funds rate doesn’t really impact mortgage rates, which depend largely on the 10-year Treasury yield, they’re often moving the same way for similar reasons. With the 10-year Treasury yield falling in recent weeks, mortgage rates have gone along for the ride and dropped quickly.

“Mortgage rates have dropped three-quarters of a percentage point from their October peak, consistent with declines in Treasury yields,” says McBride. “If inflation pressures ease further, so too will bond yields and mortgage rates. But it might be a bumpier ride as the Fed plays coy about their interest rate plans in 2024.”

Mortgage rates remain well above where they were a year ago, and this – following the rapid rise in housing prices over the past couple of years – has created a double whammy for potential homebuyers. Home prices are more expensive and the financing is pricier, resulting in a slowdown in the housing market.

The cost of a home equity line of credit (HELOC) should remain flat since HELOCs stay aligned with changes in the federal funds rate. HELOCs are typically linked to the prime rate, the interest rate that banks charge their best customers. Those with outstanding balances on their HELOC will likely see rates stay close to where they are currently, but it can still be a good time to shop around for the best rate.

3. Stock and bond investors

The stock market soared as long as the Fed kept rates at near zero for an extended period of time. Low rates were beneficial for stocks, making them look like a more attractive investment in comparison to rates on bonds and fixed-income investments such as CDs.

Now with the 10-year Treasury yield off its 52-week highs and investors expecting a lower Fed funds rate in the near term, investors have become more enthusiastic about stocks in the last couple of months.

“Stocks and bonds have rallied strongly since October on the belief that the Fed will begin cutting interest rates early in 2024,” says McBride. “The Fed will give markets another reality check about that, but if we get the elusive soft landing investors will be rewarded for hanging in there.”

Over the past 18 months, higher rates have hit bonds hard, and the longer the bond’s maturity, the more it’s been stung by rising rates. However, with a rate pause and investors anticipating an end to the Fed’s tightening soon, those putting new money into bonds should like what they’re seeing. Accordingly, the bond market has rallied strongly in the last two months.

As rates fall again, bond investors will benefit as bond prices move higher. But with the economy yet to endure a recession, stock investors may still be in for a choppy ride.

Short-term rates remain attractive if you’re looking for a safe place to stash money while waiting for things to cool off.

4. Borrowers

If you’re an existing borrower and don’t need to tap the market for money – say, you previously locked in a 30-year fixed-rate mortgage in 2021 or 2022 – you’re in good shape. But even with the rate pause, everyone else who’s looking to access new credit is still squeezed, whether that’s credit cards (more later), student loans, personal loans, auto loans or whatever else you might need to borrow for.

The average interest rate on personal loans is 11.54 percent annual percentage rate (APR), as of Dec. 6, according to a Bankrate analysis, so the rate pause will likely slow upward pressure on rates there. However, borrowers with better credit may still be able to access a lower rate. In 2021, the average rate was just 9.38 percent APR, when the fed funds rate was near zero.

Besides these new borrowers, however, anyone with floating-rate debt is breathing a sigh of relief with the Fed’s decision. Still, you may have an older loan that’s resetting at this year’s higher rates. For example, if you took out an adjustable-rate mortgage years ago, that loan may be resetting at higher rates and it may be pushing up your monthly payment, just not as high as it would be if the Fed had raised rates.

5. Credit cards

Many variable-rate credit cards change the rate they charge customers based on the prime rate, which is closely related to the federal funds rate. The Fed’s decision means that interest on variable-rate cards should remain more or less steady for now. Rates on cards are already at multi-decade highs and have risen as the Fed sharply raised rates.

“Prioritize repaying high-cost credit-card debt and utilize a zero percent or other low-rate balance-transfer offer to give those debt repayment efforts a tailwind,” says McBride. (Here are some of the top balance-transfer cards to consider.)

Rates on credit cards are largely a non-issue if you’re not running an ongoing balance.

6. The U.S. federal government

With the national debt near $34 trillion, a pause in rising rates will at least temporarily relieve some pressure on the borrowing costs of the federal government as it rolls over debt and borrows new money. Of course, the government has benefited for decades from a secular decline in interest rates. While rates might rise cyclically during an economic boom, they’ve been moving steadily lower long term.

As long as inflation remained higher than interest rates, the government was slowly taking advantage of inflation, paying down prior debts with today’s less valuable dollars. That’s an attractive prospect for the government, of course, but not for those who buy its debt. Now, with interest rates higher than inflation, the tables have turned, and the government is repaying debt with today’s more costly dollars.

Bottom line

Inflation has been running hot over the last couple of years, but with already-high rates and a clear downturn in inflation, the Fed has decided to leave rates steady for now. Smart consumers can take advantage, for example, by being more discriminating when it comes to shopping for rates on savings accounts or CDs. It can be a good time to lock in longer-term rates on CDs or even get a good balance-transfer credit card.