Finding the right fit for deposits in terms of interest rate and maturity has become more complicated in recent months. That balancing act is perhaps most important now when investing savings.
The Federal Open Market Committee (FOMC) voted on April 29 to maintain the target range for the federal funds rate at 3.50 percent to 3.75 percent. Eight members voted for no change, including Chairman Jerome Powell, who voted for the last time as Fed Chair. One member voted against the stay, advocating for a 25-basis-points decrease. Three opposed, including an easing bias in the FOMC’s statement.
Committee members are of a different mind as inflation rises again, and energy prices create new uncertainty for the economy. Amidst all this, savers must navigate the possibility of higher rates alongside the risk that economic conditions could weaken.
CD investors 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?
- 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 and consistent yield over the course of one to two years is potentially more important than simply choosing the highest yield today. Here’s why, according to recent economic data, and how the current offerings from banks and credit unions help.
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. On May 4, a one-year U.S. Treasury yielded 3.73 percent, while the two-year U.S. Treasury yielded 3.88 percent (treasury.gov).
Here’s how that compares to offers available from banks and credit unions:
The top three banks—Credit One Bank N.A. (Nevada); Pacific National Bank (Florida); and American Bank & Trust Company (Kentucky)—are now offering rates of 4.10 percent or more for 12-month CDs.
The top three credit unions—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 for 12-month CDs.
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 their choice of maturity carefully.
Inflation Stubborn and Rising
The Federal Reserve focuses on maximum employment and price stability when determining monetary policy. “Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, on average, and the unemployment rate has been little changed in recent months. Inflation is elevated, in part reflecting the recent increase in global energy prices,” the Federal Reserve said in its FOMC statement last week.
The U.S. Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers rose 0.9 percent on a seasonally adjusted basis in March, after increasing 0.3 percent in February. Over the last 12 months, the all-items index increased 3.3 percent before seasonal adjustment, a notable acceleration from the 2.4 percent annual increase reported for February.
Energy was the primary driver of the monthly increase. The energy index rose 10.9 percent in March, led by a 21.2 percent jump in gasoline prices, which accounted for nearly three quarters of the monthly increase in the all-items index. Shelter also continued to rise, increasing 0.3 percent for the month. Food prices were unchanged overall in March.
Core inflation, which excludes food and energy, rose 0.2 percent in March.
Higher inflation points directionally toward higher deposit rates.
Employment: Quite Strong
The labor market remains resilient. While the unemployment rate rose to 4.4 percent in February, it declined to 4.3 percent in March, the latest data available. That decrease suggests employment conditions remain firm despite broader uncertainty.
Initial claims for jobless benefits also point to continued strength in the labor market. Weekly claims declined to 189,000 for the period before April 25, down sharply from 215,000 claims reported on April 18, 2026. That marks the lowest level of initial claims over the prior 12 months.
The latest weekly claims figure is also unusually low from a longer-term perspective. Looking back five years, the 189,000 level represents an all-time low for weekly initial claims.
Stable employment data does not tend to point to lower interest rates, especially when inflation remains above 2 percent.
GDP: Stark Rise Projected for Second Quarter
The Federal Reserve Bank of Atlanta’s GDPNow model estimates real GDP growth for the second quarter of 2026 at 3.5 percent on a seasonally adjusted annual basis. That is down slightly from the 3.7 percent estimate reported on April 30.
If that kind of GDP materializes, the second quarter of 2026 will be a marked improvement over first quarter, which the US Bureau of Economic Analysis reported at 2.0 percent.
The wild card right now is geopolitics: how it affects energy costs, and how those costs flow through to inflation, employment, and GDP.
Bottom Line
The U.S. economic data is not showing clear signals consistent with lower rates:
- Inflation is rising again, with energy prices driving much of the latest increase.
- Unemployment remains low, and initial jobless claims are at record lows.
- GDP growth is forecast to recover in the second quarter, even after a slight downward revision.
For savers, the latest data suggests the Federal Reserve may have less reason to lower interest rates in the near term. If the U.S. economy did not have uncertainty from geopolitics, the data could even point to a greater possibility of rate increases ahead.
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 risk of decreases in rates appears greater than the risk of increases.
Locking in for too long does pose more risk if rates increase. Not locking in yield, on the other hand, leaves savers exposed if rates decline, particularly if higher energy costs contribute to a recession.
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.
