When the Fed speaks today, all savers will hear is bad news

Ben Bernanke picture

Remember the pit in your stomach that formed after Ben Bernanke announced last year the Fed planned to hold interest rates at record lows "at least through mid-2013"?

Prepare to feel ill again.

After the Fed meets Tuesday and Wednesday, its members will offer the first in a regular series of updates on when they think interest rates will increase.

The Fed forecast will include predictions for what the rates might look like through the rest of this year, 2013 and 2014.

Expect the new policy of transparency to include this bad news: The original target date for when savers might see interest rate relief is too optimistic.

After all, the Fed announced its forecasting plans in the release of the committee's last meeting minutes, in which the first shoe dropped: "… several members noted that the reference to mid-2013 might need to be adjusted before long."

That's a not-too-subtle hint that 2014 is a more realistic timetable for higher rates. Its members believe cheap lending can help an economy more than lucrative (or at least reasonable) saving.

The minutes show the board expects "a moderate pace of economic growth," slight declines in unemployment and low inflation in the short-term.

But members of the Federal Open Markets Committee also believe the economy is weak enough to maintain its rate-setting policy, which has held the federal funds rate at near zero since December 2008.

The federal funds rate is the interest rate banks pay to borrow money that other banks have on deposit with the Federal Reserve.

That policy has helped force short-term savings and CD rates down because banks no longer need our money, all in a failing effort to boost the economy through exceptionally cheap loan rates.

Still, the Fed hopes that adding a forecast for when the board might increase the federal funds rate will "help the public better understand the Committee’s monetary policy decisions …"

But what the public needs isn't a better understanding of what the Fed is up to (we're pretty clear on that by now). What it needs is the Fed to actually take its interests into consideration.

The Fed's rate-squashing policies have led us to this point: No matter which CD or savings account you choose, you can't keep up with inflation.

Yes, you're losing your money by placing it in a bank or credit union.

But there's scant evidence Bernanke and company intend to help people who rely on conservative, government-backed investments to save smartly. The savers' plight barely registers.

To be sure, we'll tell you when the committee members predict interest rates will increase.

Just don't expect to be pleasantly surprised.

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