The Federal Open Market Committee decided to lower the target range for the federal funds rate by 0.25% after its Oct. 29 meeting. If you invest savings, that change is likely known to you, but you may still be wondering:
- Is now the right time to use a certificate of deposit (CDs) to lock in my interest rate – potentially for the long term?
- What would a “good” rate be if you did lock in funds in a time investment, such as certificates or U.S. Treasuries?
These are the right questions for savers to be asking. This latest rate decrease followed an FOMC meeting at which members dissented in different policy directions. The committee has only had that kind of difference in opinion on two other occasions since 1990, according to Reuters. More on that below.
On the two questions above, we can make a few observations in November 2025: First, current bank and credit union rates for certificates are strong relative to U.S. Treasuries of similar term. Additionally, current offerings are likely among the best available for 2025.
Today’s Rates: A Look at the Listings on CD Valet
Setting aside Fed Funds and macroeconomics for a moment, institutions offer rates for 12 months that currently beat U.S. Treasury rates, according to CD Valet’s Market Intelligence Tool. A 12-month T-bill yielded 3.66% on Nov. 10; a 24-month note yielded 3.58%.
The top three banks, Dream First Bank N.A., Citizens Bank Company, and Northeast Bank, as of Nov. 13, were offering rates of 4.25% or more for 12-month CDs.
The top three credit unions, F3 Credit Union, I AM Federal Credit Union, and Daniels-Sheridan F.C.U., as of Nov. 13, were offering rates at or above 5.00% for 12-month CDs as well. Visit CD Valet for the most current rates.
Given that a rate higher than 4.00% is still quite strong for a CD, compared to the past 15 years, some depositors are moving now to lock in.
Here’s the economic perspective that has some choosing to open CDs now.
Economic Outlook: Strongly Differing Views
The Federal Reserve focuses on maximum employment and price stability when determining monetary policy. In the press conference that followed the Oct. 29 FOMC meeting, however, Federal Reserve Chair Jerome Powell said, “There were strongly differing views about how to proceed in December.” While he described lowering Fed Funds as a “solid” decision, he was less confident about the future of monetary policy after that.
What does this mean for future deposit rates? While no one can predict what deposit rates will do, the FOMC’s “differing views” widens the potential for variation in deposit rates in the future. There is also considerable speculation about the outcome of the upcoming FOMC meeting on December 9-10.
Economic data (which Powell described as limited during the current federal shutdown) also paints a mixed picture about the need for lower rates or higher rates from the Fed.
As the FOMC said in its press release: “Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.”
Inflation Picture Unclear
The Bureau of Labor Statistics’ Consumer Price Index charting tool shows prices (for all items tracked by BLS) have risen slowly through 2025. Now at 3.00%, CPI was at 2.30% in April. (You can select any category of item tracked by BLS to gauge your perspective on inflation.)
The Federal Reserve Bank of New York also reported in October that “households’ inflation expectations decreased at the short-term horizon and remained unchanged at the medium- and longer-term horizons.” Summarizing its “Survey of Consumer Expectations,” the New York Fed says households’ “median inflation expectations decreased by 0.2 percentage point” for the one-year-ahead horizon.
The inflation data available paints a mixed picture to a greater degree than in previous months, as does employment data.
Employment Softening or Sinking?
The New York Fed’s survey also reported that unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—increased by 1.4 percentage points. The latest survey results are the third consecutive time the New York Fed has reported an increase in unemployment expectations. Yet, households’ projections for future spending and income growth remained unchanged.
The latest report from the Labor Department on claims for jobless benefits was 218,000 for the week ended Sept. 20 (seasonally adjusted). That was down significantly from 264,000 for Sept. 6, a high point for the 12 months prior. We have no new data since then.
Those who are looking for job report pessimism find it in the report as well. “The mean perceived probability of finding a job fell by 0.6 percentage point to 46.80%, remaining well below its 12-month trailing average of 50.60%,” the New York Fed reported.
GDP Growth Recovering?
The Federal Reserve Bank of Atlanta’s GDPNow model estimates real GDP growth for 2025 (seasonally adjusted annual rate) at 4.00%, a high point for its projections for the year.
Last updated on Nov. 6, the next GDPNow post will be no later than Nov. 14, and it will be one to watch as new economic data arrives.
Bottom Line:
The U.S. economy is showing mixed signals:
- Inflation is not trending down,
- The employment picture is softening, but
- Initial claims for unemployment benefits were down significantly, according to the latest data available, and
- Projections for 2025 GDP growth are the strongest they’ve been so far this year.
If employment continues to decline and the U.S. economy enters a recession, the Fed may respond by returning the Fed Funds rate to the lows of 2020. There’s also a chance the economy settles in where it is at. In either case, waiting to open a CD could mean missing out on yield.
On the other hand, the economy may not enter a recession, and lower rates (following two consecutive rate decreases) may result in increased economic activity and rising inflation, which could motivate rate increases. In that case, opening a CD now may mean missing out on a higher rate, but rates would need to rise substantially before the difference is more material than the change caused by a recession scenario.
A perspective: Opening a CD now prevents potential for missed yield more than does waiting to see what happens with inflation. The maturity date chosen affects this assessment greatly.
For those who have made similar conclusions about the current landscape, consider reviewing current 12-month CD rates (or longer terms) from banks or credit unions available nationwide.
Stay ahead of rate changes and find the nation’s best CD offers with 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 to that tool.
