August 2025: The Calm Before the Cut
The Federal Reserve is widely expected to cut interest rates for the first time in over two years at its September 16–17 meeting, likely by 0.25% (25 basis points) (source: Federal Reserve). Fed officials have hinted that a larger cut is unlikely, especially after July’s hotter-than-expected producer price data (source: Reuters). Markets have priced out a 50 bps cut but still see strong odds for a smaller move.
This shift matters because once the Fed starts cutting, yields on corporate cash and short-term investments usually follow, sometimes within days.
What a Cut Could Mean for Your Deposits
1. Lower deposit rates.
Banks adjust their rates based on the Fed’s moves. After a cut, rates on corporate savings accounts, money market funds, and short-term CDs can drop quickly (source: Liberty Street Economics)
2. Money market yields will reset.
Money market funds closely track short-term interest rates. When the Fed cuts, their yields usually drop. (source: Investment Company Institute)
4. Shorter window to lock in good rates.
Because new CD pricing is forward-looking, advertised APYs tend to go down after a cut, while existing, already-opened CDs keep their fixed rates. That’s why “locking” can be critical in the final weeks before an easing cycle. (source: NerdWallet)
5. Others are already adjusting.
Data on nearly 800 U.S. corporates shows companies halved the cash share of their portfolios since 2021 and recently extended duration to capture current yields ahead of expected cuts (source: Reuters). A tell that the professional cash crowd is trying to secure today’s rates before they fade.
Why acting before September can add real value
Preserve today’s yield.
If September marks the first cut in a sequence, front-end yields typically trend lower over subsequent months so every week matters for new placements. Consumer-facing guidance echoed the same playbook after prior cuts: shop and lock while rates remain elevated. Corporate teams face the same math, just at scale. (Source: The Wall Street Journal)
Increase Duration.
A cut can compress your runway to reinvest maturing balances at comparable yields. Extending selectively (within policy) can smooth the glidepath of portfolio income instead of taking a sharp step down all at once. The recent move by corporates to lengthen duration underscores that point. (source: Reuters)
Expect narrower windows and fewer specials.
As funding pressure eases, banks often pull back on above-market rates for corporate balances. Acting now can give you the chance to take advantage of still-attractive offers before they normalize. (source: Financial Times)
Quick Action Plan Ideas for the Next Few Weeks
- List upcoming maturities — focus on anything rolling over before or just after September 17.
- Shop around now for CDs, term deposits, and other insured cash options.
- Review your money market funds — plan for lower yields after the cut.
- Check FDIC/NCUA coverage to keep large balances fully insured.
Where CNote’s Impact Cash® fits
If you’re looking to preserve yield today, our insured cash management solution can place and diversify deposits across mission-driven banks and credit unions that stay above competitive yield rates. Our Impact Cash platform is built for organizations that want liquidity, competitive yield, and transparency.
We’re still in a high-rate environment, but not for long. If you wait until after the Fed acts, you may miss the chance to lock in the best yields for months or even years. Acting in August could help your organization protect income and position cash more strategically.
Disclosure:The information provided is for informational purposes only and should not be construed as investment, legal, tax, or accounting advice. It does not constitute an offer, solicitation, or recommendation to purchase any security. Past performance is not indicative of future results, and any projections are illustrative only. Interest rates are determined by participating depository institutions and may change at any time. Impact Cash® deposits are insured by the FDIC or NCUA, subject to applicable program terms, but are not securities or investments. CNote Group, Inc. (“CNote”) is not a bank, credit union, registered investment adviser, or broker-dealer, and does not provide legal, financial, tax, or accounting advice, nor negotiate interest rates. This information is intended for institutional use only. Please consult a qualified professional to determine whether the CNote platform is appropriate for you. Certain information contained herein has been obtained from third-party sources believed to be reliable but has not been independently verified. No representation or warranty, express or implied, is made by CNote or any other party as to the accuracy or completeness of such information, and CNote assumes no responsibility for it.
