CD Rates at Banks Increased this Month
CD rates at banks continued the upward trajectory this month as banks increased rates again. For the past two years, financial institutions are increasing CD rates because the Federal Open Market Committee is increasing the fed funds rate.
This current round of monetary tightening started back in December 2015 when the Fed increased the rate .25 percent. The Fed kept the rate at a record low range of zero percent to 0.25 percent for several years. The financial crisis and Great Recession almost a decade ago forced the Fed to lower the rate to near zero percent.
The current fed funds rate is in a range of 1.25 percent to 1.5o percent. You can view a chart of the fed funds rate going back to 1955 at the Federal Reserve Bank of St. Louis.
Since December 2015, CD rates at banks also moved higher. Back then the best CD rates on 1 year certificates of deposit were around 1.05 percent. Since then, the best 1 year CD rates have doubled and are currently at 2.10 percent.
The expected uptrend for CD rates and for deposit rates in general is higher for the rest of 2018 and into 2019. The Fed is expected to increase the fed funds rate at least twice this year and maybe more. The Fed usually increases the rate in 25 basis point increments.
If the Fed falls behind the inflation curve we could see more than two rate hikes. In addition, we could see hikes in 50 basis point increments. Regardless of how many times the rate is increased by the Fed, the rate is moving higher.
This is good news for depositors who are finally getting relief from historically low interest rates. You can see a list of current CD rate changes from banks and credit unions listed below.
RatesORama.com Average Mortgage Rates