Published October 29, 2026. The deposit-beta lag, the October 2026 evidence, and a three-date check plan — not financial advice.
The Federal Reserve raised its target range in September 2026 and held it at 3.75%–4.00% on October 28. If you have checked your savings account since then, there is a decent chance your APY has not moved at all — or moved by less than the Fed did, weeks late. That is not a glitch and it is not (usually) your bank making an error. It is how deposit pricing works, it has a name, and right now you can watch it happening in the rate tables.
The federal funds target is a wholesale price: the range at which banks lend reserves to each other overnight. Your savings APY is a retail price, set by your bank’s treasury and marketing teams, weighing how badly they want deposits, what competitors are paying, and how likely you are to notice a low rate and leave.
That last factor is the quiet one. Research from the Federal Reserve Bank of New York defines the deposit beta as the portion of a change in the federal funds rate passed on to deposit rates: if the Fed moves 50 basis points and a bank’s deposit rate moves 25, the beta is 50%. The New York Fed’s work finds deposit rates do follow the policy rate, but they sit below it — especially when it is elevated — and betas are typically lower and slower when rates are rising than when they are falling. In plain terms: on the way up, your bank keeps a slice. On the way down, it tends to hand the cut to you faster.
You do not have to take the theory on faith. Six weeks after the September hike, its pass-through was still arriving in pieces:
October 28 was a hold, not a hike — so there is no new 25 points working its way toward your account. But a hold is not a freeze, for two reasons. First, September’s pass-through is unfinished, as the numbers above show; banks that move slowly may still nudge savings APYs up in November. Second, the path from here is pointed up: both October dissenters wanted a hike, and the next meeting, December 8–9, arrives with fresh projections. If December brings the hike forecasters expect, the whole lag cycle starts again — and the savers who benefit are the ones whose banks have a track record of actually passing hikes through.
Meanwhile, the cost of sitting in a laggard account is not abstract. The FDIC’s national average savings rate is 0.38% APY. On $10,000, that is about $38 a year. The top no-requirements accounts in today’s tables — Pibank at 4.40%, Elevault at 4.34% — pay roughly $434–$440 on the same balance. The gap, about $400 a year per $10,000, is more than sixteen September-sized hikes. No single Fed meeting will ever hand you that; only moving the money does. (The compounding mechanics behind those figures are in our compound interest guide.)
You cannot speed up your bank’s beta. You can stop paying for it. Three checks, each under five minutes:
One caution before switching purely for a headline: the very top rate in today’s tables, Axos ONE at up to 5.00%, is a new-customer rate with checking and direct-deposit conditions. A rate you actually qualify for, credited on your whole balance, beats a bigger number with a cap. Read the condition line before you read the APY.
This article is for informational purposes only and is not financial advice. APYs are variable and were verified on the dates shown.
Because the Fed does not set your APY - your bank does. Banks pass through only part of a Fed move, and on their own schedule. Economists call the share that reaches depositors the deposit beta. Online banks competing for deposits typically adjust within days to a few weeks; large branch banks often move slowly, partially, or not at all.
The portion of a change in the federal funds rate that a bank passes on to its deposit rates, as defined by Federal Reserve Bank of New York research. If the Fed raises its target by 50 basis points and a bank lifts its deposit rate by 25, that bank's beta for the move is 50 percent.
A hold adds no new push, but it does not freeze your rate either. September's 25-basis-point hike was still passing through in late October: Pibank reached 4.40% APY in the week before the decision, and the top-1% average savings rate ticked up from 4.02% to 4.04% between the October 26 and October 29 WSJ tables. Check your APY now, again in about two weeks, and again after the December 8-9 meeting.
No - new CD rates tend to move ahead of meetings, because they price in what banks expect the Fed to do next. One rate tracker logged CFG Bank, Synchrony and Capital One raising CD rates on October 27, 2026, the day before the decision. A CD you already own never changes; its APY is fixed for the term.
When the gap is large and persistent. The FDIC national average savings rate is 0.38% APY. If your bank pays near that and has not moved since September, waiting costs roughly $400 a year per $10,000 compared with a top no-requirements account at 4.34%-4.40%. A gap of a tenth of a point, by contrast, is rarely worth a switch on its own.
This article is the starting point. Copy any of these prompts into your favorite AI assistant to learn more about why savings rates lag Fed decisions:
🔎 Estimate your own bank’s deposit beta
My bank is [bank name]. The Fed raised its target range by 25 basis points on September 16, 2026 and held on October 28, 2026. My savings APY was [old APY]% before September and is [new APY]% today. Calculate my bank's implied deposit beta for this cycle, explain what that number says about how it treats depositors, and list what else I should check before concluding the bank is a laggard.
🧭 Run the wait-vs-switch math on your balance
I keep $[amount] in a savings account paying [APY]% APY. A top no-requirements account pays 4.40% APY, and the Fed next meets December 8-9, 2026. Show me: (1) what I lose per month by staying, (2) what I gain over 12 months by switching now, and (3) how big a December pass-through my current bank would need for waiting to have been the better choice. State every assumption.
💡 Build your own rate-check routine
Design a simple rate-check routine for me around the Fed's meeting calendar. I bank at [bank] and hold $[amount] across savings and CDs. Give me: the exact dates I should check my APY in the next six months, what to compare it against (name the benchmarks), the gap size that should trigger a switch, and a one-page checklist I can reuse after every FOMC meeting.
Tip: replace the bracketed parts with your own situation — the more specific your prompt, the more useful the answer.
The Fed held at 3.75%–4.00% on October 28, 2026, but September’s hike is still passing through to savings accounts — the top-1% average ticked from 4.02% to 4.04% in the last three days of October, one tracker counted 56 increases against 3 cuts in 30 days, and other banks have not moved since January. The mechanism is the deposit beta: banks choose how much of a Fed move to pass on, and when. Check your real APY today, again in mid-November, and again after December 9.
The single most important takeaway: your APY is your bank’s decision, not the Fed’s — so judge your bank by its pass-through, not by the headlines. A bank that has not moved since September is charging you roughly $400 a year per $10,000 for the privilege of waiting.
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