Not too long ago, investing savings was mostly about finding the highest rate. Depositors didn’t need to think much about what rates would do in the future because rates didn’t tend to move around much.
Now all that is changing. In February 2026, interest rates remain material. At the recent meeting of the Federal Open Market Committee on Jan. 27–28, the FOMC held its target rate range between 3.5 percent and 3.75 percent. The open question now is future FOMC moves and the effect – alongside trade policy decisions – on the future of the U.S. economy.
As has been the case for recent meetings, two voting members of the committee dissented, both calling for a 0.25 percent cut. Three members of the Federal Open Market Committee dissented in December in opposite directions, two for no cuts and one for a bigger cut.
What are people who invest savings to make of such differing opinions on the direction needed for interest rates? As we’ve covered before, depositors could not be blamed for wondering:
- 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?
But they need to add two more questions now:
- What maturity date most supports strong yield?
- Which deposit product most protects me from the new, wider potential for higher or lower deposit rates?
Producing a strong yield today is still about rate. Now maturity and product choice matter much more for savers wanting to prevent missed yield. 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
Many financial 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 3.45 percent on Feb. 6. A 24-month T-bill note yielded 3.5 percent, which was the case in our last Market Update.
Here’s how that compares to offers available from banks and credit unions:
The top three banks—State Savings Bank, Iowa; Morgan Stanley Private Bank; and Farmers State Bank, Kansas—are now offering rates of 4.04% APY* or more for 12-month CDs.
The top three credit unions—Daniels-Sheridan F.C.U., Montana; Best Financial Credit Union, Michigan; and Apple Federal Credit Union, Virginia—are now offering rates at 5.00% APY* or above 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, and they will likely be for some time. Here’s the economic perspective that informs a decision like that.
Economic Outlook: Strongly Differing Views
The Federal Reserve focuses on maximum employment and price stability when determining monetary policy. The Federal Reserve stated after the January 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 shown some signs of stabilization. Inflation remains somewhat elevated.”
Two elements now cause wider potential for variation in the future of deposit rates: Strong economic growth that leaves the door open to rising inflation, and the changing composition of the FOMC.
Both officials who dissented in January—Governors Stephen Miran and Christopher Waller—have previously supported further lowering of interest rates. Their recent position is consistent with their past voting patterns. Fed Governor Kevin Warsh has been nominated to serve as the next Chair of the Federal Reserve, succeeding Jerome Powell, whose term concludes after two more meetings.
On the economy, Powell said “incoming data since the last meeting [shows] clear improvement in the outlook for growth.” Speaking at the post meeting news conference, he described how “inflation performed about as expected” and that “labor market data came in suggesting evidence of stabilization,” describing the available data as “overall, a stronger forecast.”
Rising inflation could, of course, put a stop to talk of lower rates. It may even open up talk of higher rates. Here’s the current state of the economic data.
Stubborn Inflation: Not Defeated
The Consumer Price Index for all items (less food and energy) rose 2.5 percent over the last 12 months, according to the U.S. Bureau of Labor Statistics latest release.
Still, month to month, CPI for all items (less food and energy) is down, now sitting at 2.5 percent. On a monthly basis, CPI for all items for urban consumers is down even more to 3.39 percent.
Indexes that increased over the month include airline fares, personal care, recreation, medical care, and communication. However, price indexes for used cars and trucks, household furnishings and operations, and motor vehicle insurance were among the major indexes that decreased.
Employment: A Strong Showing
The latest Labor Department report on claims for jobless benefits shows such filings are up since December. Now at 227,000 weekly claims as of the latest data on Feb. 7, the December volume was 200,000 claims—the second-lowest weekly total in the past 12 months.
The high for the past year was 237,000 claims on Dec. 6, but that’s not high volume compared to the past five years. Claims appear to move within a stable range at this time.
On unemployment, the U.S. Bureau of Labor Statistics reported the U.S. economy added 130,000 jobs in January. The unemployment rate dropped as well over the last three months from 4.5 percent to 4.3 percent in January.
GDP: Showing Growth Not Stagnation
The Federal Reserve Bank of Atlanta’s GDPNow model now estimates real GDP growth (seasonally adjusted annual rate) at 3.7 percent. That’s what’s called a “nowcast” which predicts GDP within the next 120 days or less. The last nowcast is down from 4.2 percent on February 2.
That downward move in the GDPNow forecast reflects “real personal consumption expenditures growth and fourth-quarter real gross private domestic investment growth decreased from 3.1 percent and 7.1 percent, respectively, to 2.4 percent and 6.7 percent,” the Atlanta Fed said in its release.
Bottom Line
The U.S. economy is not showing signals consistent with lower rates:
- Inflation is declining but remains above target for the Federal Reserve.
- Unemployment numbers are headed in the right direction as well.
- Projections for GDP are quite strong by historical standards, but are down compared to prior estimates.
- The wild card is trade policy and FOMC member voting in the future, and its effects on the economy.
Rather than decline, current economic indicators suggest rates may settle into the current level for a longer term. If rates do move, it appears they will decline, as no FOMC member dissented in this latest vote by calling for a higher target rate from the Fed, nor have they in any recent votes.
For savers, that means investing in fully liquid accounts is becoming the largest threat to their yield in the future. These accounts can change their rate at any time and leave savers open to declines in yield should the rates go down in 2026.
A perspective:
- Fixed rate and term products, such as CDs and U.S. Treasuries, offer depositors the most protection from downward rate movement. They appear to present the least risk of missed yield at this point.
- Also, savers should begin considering this question when opening CDs: What will deposit rates likely be at the maturity of the CD I’m considering now? This will help them decide whether they choose options like a 12-month, or if they want to go out to longer terms because they think rates will be lower in 12 months.
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 and credit unions near you or nationwide on CD Valet.
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.
