Savings rates start to drop

Last week, the Federal Reserve cut the Federal funds rate from 4.75% to 4.5%. The relationship between the federal funds rate and the rest of the economy is complex and long term. You won't see mortgage rates drop by 0.25% straight away, for example, because they depend more on long term interest rates.

But we are already seeing rates coming down on high-interest savings account. ING Direct has dropped their rate from 4.30% to 4.20%. Countrywide Bank are down from 5.50% to 5.35%. We will see if Emigrant Direct (currently 4.75%) and HSBC Direct (4.50%) follow suit.