The Fed Is on Hold: How Expats Should Position Cash in 2026
The Federal Reserve held rates at 3.5 to 3.75% in March 2026 and signalled only one cut for the remainder of the year. That cut, if it comes, is unlikely before June at the earliest. For expats holding cash across multiple currencies in Southeast Asia, this is not a reason to panic. It is a reason to be deliberate about where your cash sits and what it is earning.
Why the Fed Is Stuck
The March FOMC voted 11-1 to hold. The dot plot projects one cut in 2026, with seven committee members favouring none at all. Core PCE inflation was revised up to 2.7% for 2026. GDP growth was nudged to 2.4%. The Fed is caught between two forces: oil prices above $105 per barrel feeding inflationary pressure, and a 15% global tariff regime adding cost-push inflation on top of that.
Goldman Sachs has pushed its first cut call from June to September. Most strategists now align on one cut, timing uncertain. The CME FedWatch tool shows probability weighted toward Q3 at the earliest.
For expats, the translation is simple. The rate environment that has delivered 3.5 to 5% on cash and short-duration instruments is not going away in the next quarter. The question is whether you are capturing that yield or letting cash sit idle.
What This Means Across Southeast Asia
Malaysia: BNM Holding Steady
Bank Negara Malaysia is holding rates steady with no hike expected near-term. The overnight policy rate remains at 3.00%. Malaysian fixed deposits for 12-month tenures are offering 3.2 to 3.6% at most commercial banks. If you hold MYR cash, you are earning a real return only if inflation stays below 3%. With the MYR at approximately 4.01 per dollar and strengthening, there is no urgency to move MYR into USD for yield purposes. The currency tailwind is doing part of the work.
Singapore: MAS Tightening Bias
The Monetary Authority of Singapore maintains a tightening bias. SGD deposits yield 2.5 to 3.5% depending on tenure. The SGD is stable and resilient. For expats earning in SGD, the combination of currency stability and reasonable deposit rates makes Singapore-based cash relatively well positioned. The risk is complacency. If the Fed does cut in Q3, SGD deposit rates will follow with a lag, and locking in today's rates via a fixed-term instrument is worth considering.
Thailand: Baht Under Pressure
Thailand's central bank faces a different problem. The baht is under pressure from oil import costs and tariff uncertainty. Thai deposit rates are lower than Malaysia or Singapore. Expats holding THB cash face both currency depreciation risk and below-inflation returns. If your plan involves remitting THB to Europe or the UK for retirement, the combination of a weakening baht and low deposit yields is working against you.
How to Position Your Cash
Know what your cash is earning. If you hold cash across three currencies and two countries, check the rate on each account. Many expats have funds sitting in current accounts earning near zero while fixed deposits or money market funds in the same currency offer 3% or more.
Short-duration instruments. With the Fed on hold, the case for short-to-medium duration bonds or bond funds remains strong. A 6 to 12-month treasury or investment-grade bond fund captures current yields without locking you in for years. If the Fed cuts in Q3, you can reinvest at the new rate. If it does not, you continue earning.
Match your cash currency to your spending currency. If you spend in MYR, your emergency fund should be in MYR. If you spend in SGD, hold SGD. Currency mismatches on cash holdings create unnecessary risk. The yield difference between a 3.5% MYR deposit and a 4% USD deposit is not worth the FX exposure unless you have a specific reason to hold USD.
Review your timeline. Cash is for the next 6 to 24 months of expenses and planned expenditures. Beyond that, cash is losing purchasing power to inflation. If you are holding two or three years of expenses in cash "because markets are uncertain," you are paying an insurance premium that compounds every quarter. The Fed being on hold does not change the arithmetic of long-term compounding.
Frequently Asked Questions
Q: Should I move cash to USD for higher yields?
A: Only if you have a specific need for USD. The yield premium over MYR or SGD deposits is 0.5 to 1.5%, but you take on FX risk. If the USD weakens further against Asian currencies, you could lose more on the exchange rate than you gain in yield.
Q: How long will rates stay this high?
A: The Fed projects one cut in 2026, likely Q3 at earliest. Asian central banks tend to follow with a 3 to 6 month lag. Current deposit rates in the region should hold through at least mid-2026.
Q: Are money market funds better than fixed deposits?
A: Money market funds offer slightly higher yields and daily liquidity. Fixed deposits offer guaranteed rates but lock your funds. For emergency reserves, a money market fund is more flexible. For planned savings, a fixed deposit with a known maturity is simpler.
Q: Does the Fed rate affect my mortgage back home?
A: If you have a GBP mortgage, the Bank of England rate matters more than the Fed. If you have a EUR mortgage, the ECB rate is relevant. However, the Fed influences global rate expectations. If the Fed stays higher for longer, the BoE and ECB are less likely to cut aggressively, which affects your mortgage rate trajectory.
Q: Should I lock in rates now with a longer-term deposit?
A: A 12 to 18-month fixed deposit at current rates is reasonable if you do not need the funds before maturity. Avoid locking in for 3 or more years, as rate direction beyond 2026 is genuinely uncertain.
Q: What about bond funds for expats?
A: Short-duration investment-grade bond funds in your base currency are a practical option. Irish-domiciled UCITS bond ETFs avoid US estate tax exposure. Avoid long-duration bonds, which are more sensitive to rate changes and could lose capital value if cuts are delayed further.
If you want to review how your cash is positioned across currencies, or whether your deposit and investment structure is capturing available yields, a short conversation is the fastest way to get clarity.
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This content is for informational purposes only and does not constitute personalised financial, investment, or tax advice. By reading this post, you agree to our disclaimer.
