Bankrate chief financial analyst Greg McBride pointed out the upside of higher interest rates, noting that they will be much better for savers compared to past several years.
"Returns have been so low for so long," McBride said on "Cavuto: Coast to Coast" on Wednesday.
"Things have turned a corner in the sense that, for much of the last three years, it was a situation where the returns on savings fell and then inflation took off," he told host Neil Cavuto. "Now we’re in a situation where, over the course of the next year or two, we’re expecting interest rates to go up and hopefully, eventually, inflation to come down."
He stressed that that would lead to "much better fortunes for savers" compared to "what they enjoyed the past several years."
McBride provided the insight shortly before the Federal Reserve on Wednesday raised its benchmark interest rate by 75-basis points for the first time in nearly three decades as policymakers intensify their fight to cool red-hot inflation, a move that threatens to slow U.S. economic growth and exacerbate financial pressure on Americans.
The 75-basis point hike – the first since 1994 – underscores just how serious Fed officials are tackling the inflation crisis after a string of alarming economic reports. The move puts the key benchmark federal funds rate at a range between 1.50% to 1.75%, the highest since the pandemic began two years ago.
Officials also laid out an aggressive path of rate increases for the remainder of the year, with new economic projections released after the two-day meeting showing that policymakers expect interest rates to hit 3.4% by the end of 2022, which would be the highest level since 2008. By comparison, the March estimate showed that officials had penciled in rates hitting 2.5% by year's end.
The move to increase rates by 75-basis points follows a dismal Labor Department report last week showing the consumer price index rose 8.6% in May from a year ago, the fastest pace of increase since December 1981, dashing economists' hopes that the inflation spike was starting to fade.
As rates rise, McBride encouraged consumers look "in the right place."
"Not all banks are going to be raising rates and certainly not at the same pace," he said.
"Larger banks, in particular that are sitting on a pile of deposits, they’re going to be very hesitant to raise rates - so it’s important to shop around."
He stressed that online banks, small community banks and credit unions are "fertile ground."
McBride noted that if the Fed will continue to be "aggressive" and if "they’re going to push the Fed Funds Rate north of 3.5%, maybe more, you are going to see this leapfrogging among banks trying to outdo each other on things like savings accounts and CDs."
"I would caution, though: consider your returns in the context of inflation," he continued.
"Rates on savings going up is great, but the other side of that, that we also need to see, we need to see inflation come down as well."
FOX Business’ Megan Henney contributed to this report.