Cash is regaining some of its sparkle.

With the Federal Reserve having left short-term rates unchanged on Wednesday — and expected to do so well into the future — many financial planners are recommending that clients put their extra money into short-term securities and high-yielding savings accounts to boost their returns.

That’s a shift from last fall, when money managers were moving into longer-term investments to lock in still-favourable yields. Banks, too, are beginning to change course. After trimming yields on cash accounts last fall, some banks are bumping up rates again to lure new deposits.

Earlier this week, for example, HSBC Holdings PLC’s online bank unit, HSBC Direct, boosted the promotional rate on its online savings account to 6 percent on new deposits until the end of April, from 5.05 percent.

Mark Rosenberg of Beverly Hills, Calif., prefers high-interest money-market accounts to certificates of deposit because the difference in yields between the two has been “very, very negligible”. “And if interest rates go up, my money-market accounts also go up,” says the 48-year-old real-estate broker and attorney.

Another advantage of moving to more-liquid investments: Doing so can give you the flexibility to quickly move into higher-yielding securities if and when interest rates start to move higher.

A raft of stronger-than-expected economic data and shifting rate expectations are spurring the move toward cash. Oil and gas prices have retreated, easing concerns over a slowdown in consumer spending. Sales of new homes increased in December for a second consecutive month, raising hopes that the worst of the housing downturn could be coming to an end.

Meanwhile, the unemployment rate is still relatively low, and the manufacturing sector is proving to be healthier than expected.

As recently as early December, there was widespread expectation that the Fed would cut rates at least twice — even three times — this year, beginning in the spring, which would have caused lenders to cut their rates on cash investments. Now, many economists believe the Fed will leave rates on hold for the entire year. Futures traders who bet on the Fed’s moves are effectively putting the odds of a rate cut at zero through August and, as of this week, are now predicting a less than 50 percent chance of a rate cut at the Fed’s December meeting, says James Bianco of Bianco Research LLC, a market-research firm in Chicago. “The ease for 2007 is completely priced out of the market,” he says.

To be sure, interest rates can change quickly. “We might be one bad inflation or a decent payroll number away from another change,” says Mr. Bianco. In fact, some Wall Street economists believe the Fed will raise rates this year if the economy continues to strengthen.

Yet most economists see a long stretch of steady rates ahead, and advisers are starting to shift strategies. After recommending that investors lock in longer-term securities last summer, Morris Armstrong, a financial planner in Danbury, Conn., started moving more of his clients’ money to short-term CDs. “If you do think the Fed is going to hold for a couple of months — for the next three months, at a minimum — you want to stay under six months,” he says.

For investors, the prolonged period of flat rates is likely to boost cash’s allure. “It’s really uncertain which direction the Fed is going, and that has effectively put a floor under the yields on money markets and CDs,” says Greg McBride, a senior financial analyst at Bankrate.com. The yields on many cash investments, which were starting to slide in the fourth quarter, have stopped falling and have even moved higher on some of the shorter-term maturities in recent weeks, he says. Average yields on six-month and one-year CDs currently range between 3.55 percent and 5.45 percent, according to Bankrate.com.

Firms are continuing to roll out new accounts. Earlier this month, ING Groep NV’s ING Direct began offering a tiered-rate checking account paying between 3 percent and 5.3 percent on deposits to some of its more-active customers. E(1)Trade Financial Corp., which also launched an online savings account paying 5.05 percent in November, recently boosted rates on its one- and five-year CDs.

Earlier this month, J.P. Morgan Chase & Co.’s Chase bank began offering a promotional rate of 5 percent on its Premier Platinum Savings account for customers with at least $25,000 in new deposits, while Capital One Financial Corp — which dropped the rate on its high-yield money-market account to 4.8 percent from 5 percent in August — pulled it back up to 5 percent. NetBank Inc.’s online NetBank has bumped up rates on its money-market account and CDs after dropping them in early December.

Not all banks, though, are raising rates. Tuesday, Citigroup Inc.’s Citibank dropped the annual yield on its e-Savings account to 4.75 percent from 5 percent, while also trimming the payouts on its recently launched money-market account to 4.50 percent from 4.75 percent on deposits of at least $25,000. The money-market account, when it first launched in October, had been paying as much as 5 percent.

E-Loan Inc., an online lender owned by the Puerto Rican banking company Popular Inc., dropped the yield on its online savings account to 5.25 percent from 5.38 percent earlier this month, although the company says it plans to bump up the yields across its longer-term CDs. The moves come at a time when money continues to pour into cash investments. At year-end, investors had parked a record $3.7 trillion in savings and money-market accounts and over $1.16 trillion in retail bank CDs, according to data from the Federal Reserve.

Meanwhile, total assets in money-market mutual funds, which respond more quickly to changes in market rates, hit a record in 2006, as average annual yields climbed to about 5 percent from 0.88 percent in 2003, says Peter Crane, founder of Crane Data LLC, which tracks money funds.

Many advisers caution against trying to time the movement of interest rates and point out that investors in more-liquid accounts risk getting stuck with lower returns if rates suddenly drop. Building a so-called ladder by buying CDs or bonds across various maturities can provide a hedge against interest-rate changes.

If rates fall, investors will be protected because the overall portfolio return is going to be higher than the market rates. Conversely, investors won’t miss out should the Fed begin to increase rates again. That’s because, as the shorter-term securities mature, investors can plow that money back into higher-yielding securities with longer maturities.

Some money managers are tweaking their laddering strategies. Mr. Armstrong, the Danbury planner, suggests investors shorten the maturities to a range of three to 15 months, instead of one to five years, as is more typical, to respond to interest-rate changes more quickly.

Stephen Bingham, a financial planner in Arlington, Va., prefers ladders of short-term Treasury bills and CDs with maturities of one year or less — where investors can find yields of about 5 percent.

The current rate environment has spurred David Derrico, a 30-year-old attorney, to move more of his money to six- and nine-month CDs and a high-yield checking account at ING Direct. “I wouldn’t want to lock in anything longer because I don’t feel like I’m missing out on much,” says the Los Angeles resident, who adds that he wants to keep his savings readily accessible since he’s planning to buy a house soon.