Finding the right fit for deposits in terms of interest rate and maturity has become more complicated as the outlook for Federal Reserve policy shifts again. For much of this year, savers were weighing whether rates would be lower by the time their certificate of deposit matured. Now, they also must consider the opposite risk: rates may move higher.
Markets now favor the Federal Reserve’s next interest rate adjustment to be a hike, according to CME Group’s FedWatch tool. That shift follows a divided Federal Open Market Committee vote on April 29 to maintain the target range for the federal funds rate at 3.50 percent to 3.75 percent. The committee’s post-meeting statement that suggested three of the four dissenting members opposed language implying future rate cuts, producing the most dissenting votes at an FOMC meeting since 1992.
The FOMC also cited the Iran war as a risk with significant implications for employment and inflation. Some officials expressed concern that a longer conflict could destabilize consumer prices.
CD investors want to know:
- Is now the right time to use a certificate of deposit to lock in an interest rate?
- What would a “good” rate be if you did lock in funds in a time investment, such as CDs or U.S. Treasuries?
- What maturity date best supports strong yield from a longer-term standpoint?
- Which deposit product best protects from the wide potential for higher or lower deposit rates?
Today’s Rates: A Look at the Listings on CD Valet
Institutions offer rates for both 6-month and 12-month CDs that currently beat comparable U.S. Treasury yields, according to CD Valet’s Market Intelligence Tool. On June 3, A 6-month U.S. Treasury yielded 3.78 percent, while a 12-month U.S. Treasury yielded 3.84 percent (treasury.gov).
Here’s how that compares to offers available from banks and credit unions:
The top three banks for 12-month CDs—Community Trust Bank Inc, Kentucky; T Bank N.A., Texas; and Home Bank of California, California—are now offering rates at or above 4.14 percent.
The top three credit unions for 12-month CDs—Golden Valley Federal Credit Union, California; A+ Federal Credit Union, Texas; and Neches Federal Credit Union, Texas—offer rates at or above 4.65 percent.
The top three banks for 6-month CDs—Dolores State Bank, Colorado; Bank of the Orient, California; and T Bank N.A., Texas;—are offering rates of 4.16 percent or more.
The top three credit unions for 6-month CDs—Park City Credit Union, Wisconsin; Internal Revenue F.C.U., Louisiana; and Indiana University Credit Union, Indiana—offer rates at or above 4.50 percent.
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 competitive. But savers should consider both APY and maturity carefully, especially with economic data suggesting potential for rate increases.
Inflation: Stubborn and Rising
The Federal Reserve focuses on maximum employment and price stability when determining monetary policy. The latest inflation data gives the Fed little reason to move quickly toward lower rates.
Consumer Price Index inflation rose 0.64 percent in April on a seasonally adjusted basis, following a 0.87 percent increase in March. Over the last 12 months, headline CPI increased to 3.81 percent, up from 3.26 percent in March and well above the Federal Reserve’s 2 percent target.
Energy remains the clearest source of inflation pressure. Energy prices rose 3.81 percent from March to April and 17.87 percent from April 2025 to April 2026. Food prices also increased, rising 0.50 percent for the month and 3.18 percent over the year. Core CPI, which excludes food and energy, rose 0.38 percent in April and 2.75 percent year over year.
The April report also came in hotter than expected. The Cleveland Federal Reserve forecast projected headline CPI inflation of 0.45 percent for the month and 3.56 percent over the year; the actual readings were 0.64 percent and 3.81 percent. Core inflation also exceeded the forecast, both month over month and year over year.
Higher inflation points directionally toward higher deposit rates if employment markets remain strong.
Employment: Still Strong
Initial claims for jobless benefits continue to suggest a stable labor market. In the week ending May 16, seasonally adjusted initial claims were 209,000, down 3,000 from the previous week’s final level of 212,000. The four-week moving average was 202,500, also lower than the prior week’s final average of 204,000.
The trend since February also points more toward stability than deterioration. Initial claims declined from 230,000 for the week ending Feb. 7 to 209,000 for the week ending May 16. Insured unemployment also moved lower, from 1.865 million for the week ending Feb. 7 to 1.782 million for the week ending May 9, even with some week-to-week variation.
GDP forecasts also suggest growth.
GDP: Growth Forecast Strengthens
The Federal Reserve Bank of Atlanta’s GDPNow model estimates real GDP growth for the second quarter of 2026 at 4.3 percent on a seasonally adjusted annual basis. That is up from the 4.0 percent estimate reported on May 14.
The upward move reflects stronger nowcasts for two important parts of the economy. After recent releases from the U.S. Census Bureau and the Federal Reserve Board of Governors, the GDPNow estimate for second-quarter real personal consumption expenditures growth increased from 2.7 percent to 2.9 percent. The estimate for real gross private domestic investment growth rose from 10.2 percent to 11.4 percent.
Bottom Line
The U.S. economic data is not showing clear signals consistent with lower rates:
- Inflation is rising again, with energy and food prices adding pressure.
- Initial jobless claims and insured unemployment remain low and have moved lower since February.
- GDP growth is forecast to strengthen in the second quarter.
- Fed futures now suggest the possibility of rate increases ahead, a stark contrast to the bond-market outlook in prior months.
A perspective:
CDs protect yield if rates decline; savings accounts do not. CD rates are locked in, while savings account rates can fall quickly if institutions decide to lower deposit costs. That makes CDs useful for savers who want to protect income over a defined period, especially when the path of interest rates remains uncertain.
Maturity, however, continues to be just as important as APY when selecting time deposits. The reason has changed somewhat from prior months. Earlier this year, savers had to consider whether rates would be lower by the time their CD matured. Now, they also have to be careful not to lock in for too long and miss what could potentially be 50 basis points of additional APY in 2027.
That does not mean savers should avoid CDs. It does mean the balance between yield and maturity matters more. Shorter maturities may preserve flexibility if rates rise, while longer maturities may still protect income if the economy weakens and rates eventually fall.
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 over 4,000 U.S. banks and credit unions. Contact Jamie Fairbanks at jfairbanks@cdvalet.com to subscribe to that tool.
