The Fed could keep rates on hold forever. What it means for your cash.

When it comes to adjusting interest rates, this could be it for the Federal Reserve. And that is a boon for cash assets, like Treasury bills.

Increasingly economists are contemplating a scenario where the central bank makes no change to rates. Bank of America, on Friday, pushed its forecast for rate cuts to mid-2027 from late this year, but caveats there’s a high risk of unexpected outcomes like an “indefinite hold” from the Fed.

Uncertainty about the level of shock that the Iran war, tariffs, immigration policy and artificial intelligence will inflict on the labor market and inflation—the Fed’s two main concerns—means the “tails are fat,” BofA’s head of economics Aditya Bhave and his team wrote. That is another way of saying rare events won’t be all that rare.

The forecast comes after Deutsche Bank, in a podcast last month, said it sees the Fed “on hold indefinitely,” labeling current rates as neutral—meaning a level where the central bank doesn’t need to fight high unemployment or inflation. HSBC expects no rate cuts over its entire forecast horizon, which in this case is 2026 and all of 2027.

The idea that rates will stay where they are “indefinitely” or as far as Wall Street can see benefits investors looking to stay in short-term assets: Treasury bills (T-bill), money-market funds and online savings account, all closely follow the Fed’s current target interest rate of 3.5% to 3.75%. Higher-for-longer rates mean such assets are going to stay prevalent.

Money-market funds, which invests in short-term debt securities, saw their assets increase $122.35 billion for the week ended May 6, which is the largest week-over-week increase since the week ending April 22, 2020 at $127.54 billion, according to LSEG. Their yields vary by institution, but many offer yield around 3.5% to 3.7%.

A U.S. debt or T-bill that expires in four weeks currently offers 3.67%. A 16-week T-bill delivers 3.69% in yield. These yields are basically the difference between how much an investor pays and how much value one gets when the bill matures. You pay less, you get more. In the second half of last year, the yields offered by T-bills maturing in six months or a year were lower than the effective federal-funds rate (EFFR), the actual cost of borrowing overnight occurring typically within the target set by the Fed. That is because the market saw rate cuts ahead.

Now that bets for cuts have tempered, investors are seeing yields bundle together, or at times surpass, the EFFR. Meaning there are investors who see a hike in rates as a possibility in the next six months to a year, which allow yields to move even above EFFR. Its another way to gauge market’s expectation on rates.

Investors can buy T-bills through TreasuryDirect or use exchange-traded funds like the Vanguard Ultra-Short Treasury. The iShares 0-3 Month Treasury Bond, another popular T-bill ETF, saw $11.4 billion in inflow early April on a 25-day rolling basis, its best inflow on record. The 25-day rolling smoothens out recent volatility due to geopolitics.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com.