The Federal Open Market Committee (FOMC) voted to lower the federal funds target rate by a quarter percentage point on Sept. 17. With rates anticipated to decline, you’re probably wondering: Is now the right time to use a certificate of deposit (CDs) to lock in my interest rate – potentially for the long term?
While a CD’s structure will provide known returns, regardless of the future direction of fed funds, the current economic environment in September 2025 suggests that rates are not likely to increase dramatically any time soon. Waiting to lock in higher returns may represent a greater risk to returns than investing in a CD now would.
Let’s look at where CDs and U.S. Treasuries are today, and why today’s rates may be the best available for a while.
Today’s Rates: A Look at the Listings on CD Valet
Setting macroeconomics aside, financial institutions currently offer rates on 12-month CDs that beat U.S. Treasury rates, according to CD Valet’s Market Intelligence Tool. A 12-month T-bill yielded 3.61% to savers on September 22; a 24-month note yielded the same.
The top three banks, Wintrust Bank N.A., Mid-America Bank, and Dream First Bank N.A., are now offering rates of 4.30% or more for 12-month CDs. The top three credit unions, I AM Federal Credit Union, Louisville Gas and Electric Company, and Daniels-Sheridan F.C.U., offer rates at or above 5.11% for 12-month CDs. (Visit CD Valet for the most current rates.)
| Product | Yield (Sept. 22, 2025) |
| 12-mo Treasury bill | 3.61% |
| 24-mo Treasury note | 3.61% |
| Top banks (12-mo CD) | 4.30%+ |
| Top credit unions (12-mo CD) | 5.11%+ |
Given that a rate higher than 4.00% is still quite strong for a CD in the context of the past 15 years, some depositors are moving now to lock in. Here’s the economic perspective behind those decisions.
Economic Outlook: Fed Indicates Lower Interest Rates Coming
The Federal Reserve focuses on maximum employment and price stability when determining monetary policy. Many follow jobs and price data, such as month-to-month inflation, unemployment, and jobless claims, published by the Federal Reserve Bank of St. Louis. The Federal Reserve Bank of Atlanta also publishes a GDP forecast called GDPNow, which gauges economic growth based on its relationship with employment and inflation.
Media read Fed Chair Jerome Powell’s comments after the FOMC meeting to favor two more rate decreases before the end of 2025. Those cuts would presumably occur after the next two meetings of the FOMC on October 28-29 and on December 9-10.
No one, of course, can predict the Fed’s decision, and that’s not just because of its independence in making that decision. One counterpoint to those who forecast declining rates is inflation, which still hovers above the central bank’s inflation target of 2.00%. Yet, labor headwinds have appeared in the jobless claims, even though unemployment is not spiking.
Inflation Picture Unclear
The Bureau of Labor Statistics reported on Sept. 11 that the Consumer Price Index saw a 0.40% increase in August (a seasonally adjusted figure), which was the most significant gain since January. With that increase, the annual inflation rate rose to 2.90%, up 0.20% over the prior month and the highest reading since January.
For prices on goods and services excluding food and energy, known as “core” inflation, August saw a gain of 0.30%, putting the 12-month figure at 3.10%, CNBC reported. Again, the Federal Reserve targets 2.00% for core inflation.
Prices appear stubbornly elevated, so what about employment?
Employment: Strong or Struggling?
The Labor Department reported 263,000 claims for jobless benefits for the week ended Sept. 6 (seasonally adjusted), a high point for the 12 months prior and a sharp increase compared to the previous month. Yet, as of the report on Sept. 13, jobless claims are down again to 231,000.
The U.S. unemployment rate climbed slightly to 4.30% in August, the latest data reported by the Federal Reserve Bank of St. Louis’s FRED platform.
Still, economic data lends itself to two different forecasts for the rates. That 4.30% unemployment rate is the highest reported rate of the past year, and that may drive further rate decreases. On the other hand, the unemployment rate’s increase is very slight, and began during the summer after the unemployment rate declined from 4.20% in May.
GDP Growth Recovering?
Federal Reserve Bank of Atlanta’s GDPNow model estimates real GDP growth for 2025 (seasonally adjusted annual rate) at 3.30%, down from 3.40% on September 16.
While that tenth of a percent decrease seems small, the Atlanta Fed also reported softening in key sectors of the U.S. economy. “Real residential investment growth,” for example, “decreased from -4.60% to -6.30%,” it reported.
Bottom Line:
The U.S. economy is showing mixed signals to CD investors at this point in 2025.
- Inflation is not trending down, though it is not skyrocketing as it did after the pandemic.
- The unemployment rate is up, setting a record for the year. Yet, an upward movement of 0.10% is not generally considered a spike in unemployment.
- Initial claims for unemployment benefits also hit a record for the prior 12 months, but have now dropped again.
- Projections for 2025 GDP growth, while not signaling a recession, are down, with specific sectors showing larger drops in growth.
Stay ahead of rate changes and find the nation’s best CD offers with CD Valet.
We can’t say for sure where rates will go, or if the Fed really will lower its target rate twice more this year. For those who see current data suggesting decreases ahead from the Fed, consider reviewing current 12-month CD rates from banks or credit unions on CD Valet.
Financial institutions can also view and compare their data using CD Valet’s Market Intelligence Tool, which aggregates certificate data from nearly 5,000 U.S. banks and credit unions. Contact Jamie Fairbanks at jfairbanks@cdvalet.com to subscribe.
