{"id":4002,"date":"2025-08-19T09:45:49","date_gmt":"2025-08-19T16:45:49","guid":{"rendered":"https:\/\/www.cdvalet.com\/blog\/?p=4002"},"modified":"2025-12-17T12:25:02","modified_gmt":"2025-12-17T20:25:02","slug":"cd-rates-hold-strong-fed-weighs-september-move","status":"publish","type":"post","link":"https:\/\/www.cdvalet.com\/insights\/cd-rates-hold-strong-fed-weighs-september-move\/","title":{"rendered":"CD Rates Hold Strong as Fed Weighs September Move"},"content":{"rendered":"\n

Did you open a 9-month or 12-month certificate last year that\u2019s now coming to term?<\/p>\n\n\n\n

Are you considering placing your savings in a product that will maintain its rates even if interest rates decline?<\/p>\n\n\n\n

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\u2019s 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.<\/p>\n\n\n\n

Setting macroeconomics aside, institutions also offer rates for 12 months that currently beat U.S. Treasury rates, according to CD Valet\u2019s Market Intelligence Tool<\/strong>. A 12-month T-bill yielded 3.93% to savers on August 18; a 24-month note yielded 3.77%.<\/p>\n\n\n\n

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<\/a> for the most current rates.  <\/p>\n\n\n\n

Let\u2019s look at why these kinds of rates may not be available for long.<\/p>\n\n\n\n

What does economic data suggest for future interest rates?<\/strong><\/h3>\n\n\n\n

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.<\/p>\n\n\n\n

Reading the media, the prevailing opinion appears to be that the Fed will lower rates in September. No one can predict the Fed\u2019s 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.<\/p>\n\n\n\n

Inflation Picture Unclear<\/strong><\/h3>\n\n\n\n

The Bureau of Labor Statistics reported on August 12 the Consumer Price Index<\/a> rose 0.2% in seasonally adjusted terms in July and 2.7% over the past year.<\/p>\n\n\n\n

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<\/a>. On a month-to-month basis, the core inflation rate saw the most significant increase since January.<\/p>\n\n\n\n

So, is inflation cooling or not?  <\/p>\n\n\n\n

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\u2019t see inflation on the run. The \u201csticky\u201d inflation that most concerned Fed Chairman Powell was trending down (in terms of one-year change) until May 2025. It\u2019s been posting increases every month since then.<\/p>\n\n\n\n

Strengthening Employment<\/strong><\/h3>\n\n\n\n

The U.S. unemployment rate climbed slightly to 4.2% in March, up from 4% in January. But, since then, it has hovered<\/a> between 4.1% and 4.2%, according to the Federal Reserve Bank of St. Louis.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

GDP Growth Recovering?<\/strong><\/h3>\n\n\n\n

Federal Reserve Bank of Atlanta\u2019s GDPNow model estimates real GDP growth for 2025 (seasonally adjusted annual rate) at\u00a02.5 percent in the third quarter of 2025. That\u2019s the August 15 forecast<\/a>, unchanged from August 7 after rounding, although the trendline shows some upward movement.<\/p>\n\n\n\n

Bottom Line: <\/h3>\n\n\n\n

The U.S. economy is showing signs of strength to CD investors at this point in 2025.<\/p>\n\n\n\n