With more uncertainty comes more risk of missing out on yield, so when it comes to deposits, balancing interest rate, liquidity, and maturity is a complicated task for today’s savers. Still, savers can find choices that help protect yield if they are aware of the landscape when choosing their investments.
After its latest meeting on March 17-18, the Federal Open Market Committee (FOMC) agreed to leave the federal funds rate unchanged at 3.50 percent to 3.75 percent, citing an elevated uncertainty regarding the country’s economic outlook and the implications of recent developments in the Middle East. The action was supported by all voting FOMC members except one.
In uncertain times, depositors want to know:
- Is now the right time to use a certificate of deposit (CD) to lock in an 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 CDs or U.S. Treasuries?
In February, we began suggesting savers add two more questions:
- What maturity date most supports strong yield from a longer-term standpoint?
- Which deposit product most protects from the wide potential for higher or lower deposit rates?
Protecting a strong yield over the course of one to two years is as important as choosing a strong yield today. Here’s why, along with the current offerings from banks and credit unions that can help savers amidst the current uncertainty.
Today’s Rates: A Look at the Listings on CD Valet
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 3.55 percent on Mar. 6. A 24-month T-bill note yielded 3.56 percent.
Here’s how that compares to offers available from banks and credit unions:
The top three banks—Credit One Bank N.A., Nevada; CCBank, Utah; LimeLight Bank, Utah—are now offering rates of 4.10 percent APY* or more for 12-month CDs.
The top three credit unions—Daniels-Sheridan F.C.U., Montana; Golden Valley Federal Credit Union, California; Apple Federal Credit Union, Virginia—offer rates at or above 5.00 percent APY* for 12 months.
Visit CD Valet for the most current rates or to find rates available near you.
Given the yield from U.S. Treasuries, these offers are quite competitive, but savers should consider the economic perspective that can inform their choice of maturity.
Economic Outlook: The Inflation Question
The Federal Reserve focuses on maximum employment and price stability when determining monetary policy. The Federal Reserve stated after the March FOMC meeting that “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated.”
Closely watched by savers, the “dot plot” charts FOMC members’ rate projections. It suggests one reduction to come this year with another in 2027. However, that last sentence on inflation, or one similar to it, has been a hallmark of the FOMC statement so far this year. As Chair Powell said in his press conference on March 18:
Our “forecast is that we’ll be making progress on inflation. Not as much as we had hoped, but some progress on inflation…in the middle of the year. [With] progress on tariffs going through once and then tariff inflation coming down…the rate forecast is conditional on the performance of the economy. So, if we don’t see that progress, then you won’t see a rate cut.”
Total core inflation, Powell said, is at “about 3 percent, and some big chunk of that, between a half and three-quarters is actually tariffs…we’re looking for progress on that.”
Inflation: The Current Wild Card
The U.S. Bureau of Labor Statistics reported on March 11 that the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent on a seasonally adjusted basis in February, after rising 0.2 percent in January. Over the last 12 months, the all-items index increased 2.4 percent before seasonal adjustment.
The index for shelter rose 0.2 percent in February and was the largest factor in the all-items monthly increase. The food index increased 0.4 percent over the month as did the food at home index.
The index for all items less food and energy rose 0.2 percent in February. Indexes that increased over the month include medical care, apparel, household furnishings and operations, airline fares, and education. Demand for many of these items is driven by the housing market, but as Chair Powell said, “activity in the housing sector has remained weak.”
It’s hard to say where inflation would go if housing were to heat up while energy prices rose and tariffs settled in.
Employment: Stable
In the labor market, the unemployment rate was 4.4 percent in February and has changed little since late last summer. Job gains, however, have also remained low.
“A good part of the slowing in the pace of job growth over the past year reflects a decline in the growth of the labor force, due to lower immigration and labor force participation, though labor demand has clearly softened as well,” Powell said. “Other indicators, including job openings, layoffs, hiring, and nominal wage growth, generally show little change in recent months.”
The latest Labor Department report on claims for jobless benefits shows initial filings for jobless benefits are at the third-lowest point of the past year. Now at 205,000 weekly claims as of the latest data on March 14, the low point was 201,000 claims on Jan. 10. The high point of the past 12 months was 259,000 weekly claims on Sept. 6, 2025.
GDP: Showing Growth Not Stagnation
The Federal Reserve Bank of Atlanta’s GDPNow model now estimates real GDP growth (seasonally adjusted annual rate) at 2 percent. That’s what is called a “nowcast,” which predicts GDP within the next 120 days or less. The latest nowcast is down from 3.7 percent in CD Valet’s last Market Update blog.
That downward move in the GDPNow forecast reflects that the “construction spending report from the US Census Bureau [shows] real private fixed investment growth decreased from 3.1 percent to 1.2 percent,” the Atlanta Fed said in its release.
Bottom Line
The U.S. economy is not showing signals consistent with lower rates:
- Inflation remains above target for the Federal Reserve.
- Unemployment numbers are largely flat, some in ways suggesting a need for support.
- Projections for GDP are weakening.
- The wild cards are trade policy and geopolitical influences on the economy.
Rate movement after a saver selects a CD is one of the biggest risks to their returns, especially when accumulated over years. A strong rate on a CD today may not be as strong if the Fed does have to raise its target rate to combat inflation. Yet, fully liquid accounts remain the largest threat to saver yield because they can be repriced by banking institutions at any time.
A perspective:
CDs protect yield as rates decline; savings accounts do not. CD rates are locked in, but since institutions do not tend to raise savings account rates with higher Fed target rates, they still tend to offer better protection from an uncertain future. At this point, they appear to present the least risk of missed yield.
Maturity and rate combinations have become far more material for savers seeking yield protection because the FOMC dot-plot suggests a 50-basis point decline in 2026 and 2027. Going long, however, also has its risks, especially if geopolitics spur rising inflation.
Still, missing 50 bps would be less painful than missing 1-3 percent in a recession scenario where the Fed drastically supports the economy.
Many depositors now choose shorter maturities of 12 months or less because of higher returns, even when compared to U.S. Treasuries. You can see those rates from banks or credit unions near you or nationwide on CD Valet.
