Did you open a 9-month or 12-month certificate last year that’s now coming to term?
Are you considering placing your savings in a product that will maintain its rates even if interest rates decline?
The current economic environment in August 2025 may be an opportune time for depositors to open a certificate of deposit at the best rates this year. Why’s that? Some forecast the Federal Reserve will lower its target rate in September. If they are right, then CDs opened this month will appear more favorable. And, if the Fed does not cut rates, it may not increase its target rate either.
Setting macroeconomics aside, institutions also 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 3.93% to savers on August 18; a 24-month note yielded 3.77%.
The top three banks, Balboa Thrift and Loan Association, EagleBank, and Washita State Bank, are now offering 4.4% for 12 months. The top three credit unions, Louisville Gas and Electric Company, Daniels-Sheridan F.C.U., and New Covenant Dominion F.C.U., offer rates above 5%. Visit CD Valet for the most current rates.
Let’s look at why these kinds of rates may not be available for long.
What does economic data suggest for future interest rates?
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 many use to gauge economic growth due to its relationship with employment and inflation.
Reading the media, the prevailing opinion appears to be that the Fed will lower rates in September. No one can predict the Fed’s decision, however, and not just because of its independence in making that decision. The economy is not showing clear signs of cooling or of a need for stimulation, which has caused some to predict no change in rates from the Federal Open Market Committee meeting on September 16-17.
Inflation Picture Unclear
The Bureau of Labor Statistics reported on August 12 the Consumer Price Index rose 0.2% in seasonally adjusted terms in July and 2.7% over the past year.
Excluding food and energy, the core CPI increased 0.3% for the month of July, and is up 3.1% from a year ago. The Dow Jones consensus estimates were a 0.3% increase for July and 3% for the 12-month period leading up to July 31, CNBC reported. On a month-to-month basis, the core inflation rate saw the most significant increase since January.
So, is inflation cooling or not?
Some look at how closely inflation data aligned with predictions and forecast a rate decrease in September. Others look at the increases across data points and don’t see inflation on the run. The “sticky” inflation that most concerned Fed Chairman Powell was trending down (in terms of one-year change) until May 2025. It’s been posting increases every month since then.
Strengthening Employment
The U.S. unemployment rate climbed slightly to 4.2% in March, up from 4% in January. But, since then, it has hovered between 4.1% and 4.2%, according to the Federal Reserve Bank of St. Louis.
Unemployment claims are also dropping. While there was a clear peak in 2025 thus far in June, at a weekly volume of 250,000, 2024 and 2023 had higher peaks for unemployment. Since June, initial unemployment claims have decreased to 224,000.
GDP Growth Recovering?
Federal Reserve Bank of Atlanta’s GDPNow model estimates real GDP growth for 2025 (seasonally adjusted annual rate) at 2.5 percent in the third quarter of 2025. That’s the August 15 forecast, unchanged from August 7 after rounding, although the trendline shows some upward movement.
Bottom Line:
The U.S. economy is showing signs of strength to CD investors at this point in 2025.
- Inflation is not trending down.
- The unemployment rate is holding.
- Initial claims for unemployment benefits are dropping.
- Projections for 2025 GDP growth, while not signaling an economic boom, are trending upward.
We can’t say for sure whether the Fed will or won’t decrease rates in September (there are a few indicators of a rate increase on the horizon if the economic picture remains unchanged).
If that motivates you to review current 12-month CD rates from banks or credit unions, you can use CD Valet to track APYs and shop offerings from institutions near you or 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 4,164 U.S. banks and credit unions. Contact Jamie Fairbanks at jfairbanks@cdvalet.com to subscribe to that tool.
