The Federal Reserve acted unanimously today to hold the Fed Funds target rate at 2.25% to 2.50%. Whereas the Fed had previously guided to two raises in 2019, it now indicates that there will be zero. Fed Chair Jerome Powell remains true to his commitment to bow to Presidential harassment.

The Fed is now guiding towards a signal rate increase in 2020. Its so-called neutral rate remains at 2.80% so we’d need to see another rate increase in 2021 to get there, as Powell has committed to doing.

The Fed’s “lower-for-longer” policy is not good for savers. It also isn’t good news for an economy that needs to have a normalized yield structure in order to address incipient inflation, and for a Fed that needs to have the ability to be responsive to the next downturn. And, it doesn’t seem to be good for banks either as the interest rate curve is very compressed, with the 10-year trading down to at 2.55% in the immediate aftermath of the announcement.

In the past, I have suggested that the depositors should be cautious locking into CDs against a Fed that is raising rates. Today’s developments, however, make CDs substantially more attractive for money that you are certain that you will not need until maturity. One-year online CDs at or above 2.85% would seem to be particularly attractive. You may even find higher one-year rates at local banks and local credit unions.

We are pulling through the winter, and savings and CD rates are continuing to firm, but are not moving dramatically higher as the Fed now seems intent to hold the Fed Funds rate at 2.25% to 2.50% until later in the year.

Here are 5 products that we find particularly compelling:

1. CIT Bank Savings Builder – 2.45%, Requires $25,000 Balance or $100 plus an additional deposit of $100 a month

CIT Bank’s reviews are largely favorable and their rate is very attractive. BestCashCow has named CIT as one of our best bets for 2019 so we think it will remain competitive. There are two ways to qualify for the savings builder account – either to maintain a $25,000 balance or to open the account with $100 and deposit at least $100 during each monthly measurement period (between the 4^th day of each month until the 4^th day of the following month).

2. CIBC Bank – 2.39% Savings Rate, No Minimum Balance

CIBC is one of Canada’s largest banks and launched its US online bank in late 2018. Their 2.39% savings rate is aggressive, and they have been among the first to raise their rates when the Federal Reserve raised the Fed Funds to its current level in December. To boot, the bank’s online savings account has no minimum balance.

3. My Savings Direct – 2.40% Savings Rate, $1 Minimum Balance

My Savings Direct is owned by Emigrant Bank. An account here bears certain risks and disadvantages that are well known to anyone who has followed the online savings space and Emigrant’s strategy. We highlighted these in our February newsletter. But, until and unless these risks materialize, the rate is attractive at 2.40%.

See and compare all of the best online savings rates here.

4. Purepoint – 2.60% 13-Month No Penalty CD, $10,000 Minimum

We have been hesitant to recommend CDs with rates rising, but we have also spoken very highly of the benefits of No Penalty CDs. With that in mind, Purepoint’s 2.60% No Penalty CD, introduced earlier this week, is startlingly attractive. It represents a 15 basis point premium on the best savings accounts (a 25 basis point premium on Purepoint’s savings account) and does not have the liquidity risk of CDs. We think this product is a very attractive alternative to a savings account at the moment.

5. Live Oak Bank – 2.85% 1-Year CD, $2,500 Minimum

Many are looking to short-term CDs to pick up yield and Live Oak’s 1-Year CD is one of the highest yielding and safest ways that we see to do it. The penalty for early withdrawal is only 3 months' interest and the minimum balance is only $2,500.

Check out the best 1-year CD rates here and see long-term CD rates here and special rate CDs here.

Have a great month.

BB&T and SunTrust Bank announced their merger this morning. The banks are the 12^th and 13^th largest US banks based on assets and the combined entity will become the sixth largest US bank. (A complete list of the largest banks based on asset size is here).

I spent my morning reading all of the articles across financial media that have been trying to explain the rationale for this merger, which is the largest proposed bank merger in over a decade. I then waited until 10 AM to watch the CEOs of the two institutions appear on CNBC.

I am not seeing any reason for consumers to be excited about this merger.

Bank of America and Wells Fargo have proven over the last decade that bigger is not better. Their large asset size has not enabled a better lending portfolio, nor has it enabled them to extend more meaningfully into new or more creative financing initiatives in the public interest.

In terms of consumer banking, their large size does not necessarily enable them to offer more creative mortgages products, home equity loans or auto loans. Neither these two - nor JP Morgan Chase or Citibank – have used their size to offer competitive savings rates or CD rates.

We are living in a world where small and creative institutions can offer more unique solutions. We have seen an influx of smaller banks and tremendously talented so-called Neobanks that offer technology solutions that outflank anything that the larger banks can produce. It is a sheer fact that in relation to technology, being smaller and more nimble is an advantage.

Therefore, when Kelly King, BB&T Chairman and CEO, and Bill Rogers, SunTrust Chairman and CEO, began speaking on CNBC this morning about the primary driver for their merger was technology investment, it struck me as being about as compelling as a Trump State of the Union address. The truth is that both banks, in their current position and without a merger, should be able to find the technology talent and resources in Atlanta or Charlotte to compete technologically across all consumer and the institutional spectrums.

Towards the end of the interview, Sara Eisen asked point blank whether this merger is in fact a defensive move designed to address the issue of contracting net interest margins. Kelly King, who has always been a straight shooter on CNBC, turned very candid and indicated that his view of some sort of inflection point in net interest margins is a motivating factor.

In other words, this merger is like an old-line industrial merger. It is being done to drive costs out of the system. Excessive branches in Florida, Georgia and the Carolinas will be shuttered, and people will lose their jobs. Investors in the companies may or may not make money, but few if any benefits are going to inure over the short or medium term to customers of either bank.

As someone who watches innovation in the banking space, I see nothing to celebrate here and I hope that this is the last, and not the first, of a new wave of bank mergers.

Full Disclosure: The author has been an investor in and a consumer of services of both BB&T and SunTrust in the past, and would have no interest in going near either one right now.