Following some encouraging signs earlier in the year, inflation ticked up in July and August and remained unchanged in September, leading many to reconsider their long-term economic outlook. With inflation stuck at 3.7% currently, it remains significantly above the Federal Reserve’s target goal of 2%. And that will be addressed when the Fed meets again at the end of this month.
With just two more meetings scheduled for this calendar year — October 31 through November 1 and December 12 through December 13 — another rate hike is being predicted by many. And with the benchmark rate already at a 22-year high with a range of 5.25% to 5.50%, that’s going to make borrowing even more expensive than it already is.
But what will happen to savings accounts? Specifically, what should savers expect to happen to CD interest rates after the next Fed meeting? That’s what we will break down below.
What will happen to CD interest rates after the next Fed meeting?
CD interest rates today are the highest they’ve been in years. With rates over 5.5% easily found online currently, it makes sense for savers to open an account now. You may even be eligible for a CD with a 7% rate right now. That said, interest rates on CDs are heavily influenced by the Fed’s benchmark rate. So if that heads upward once again in 2023, CD rates are likely to follow.
“Based on the recent trends we have been seeing, as well as the anticipated rate movements for the remainder of the year that experts are forecasting, we expect CD rates to largely remain consistent, or at most, slightly higher, for the remainder of 2023,” Billy Cho, market leader at Citi, told CBS News in September, prior to that month’s inflation numbers release.
How much CD rates increase, however, is unknown, although if the Fed does bump up their benchmark, the ultimate influence on CD rates is likely to cause only a slight bump. But even a slight bump could be worth it for savers, especially for those considering making a substantial deposit. The more you deposit into a CD, after all, the more interest you’ll make — and the more that interest will compound over time.
Find out how much you could make with a top-earning CD here now.
How much can you make with a CD account now?
For many savers, it helps to see the exact figures on a screen to better determine the worth of today’s CD rates. Here’s how much you could make with a one-year CD, varying by deposits and some of the top rates available today (note the substantial difference in returns as deposit amounts grow).
$1,000 deposit
- At 6.00%: $60 (for a total of $1,060 total after one year)
- At 5.75%: $57.50 (for a total of $1,057.50 total after one year)
- At 5.50%: $55 (for a total of $1,055 total after one year)
$5,000 deposit
- At 6.00%: $300 (for a total of $5,300 after one year)
- At 5.75%: $287.50 (for a total of $5,287.50 after one year)
- At 5.50%: $275.00 (for a total of $5,275 after one year)
$10,000 deposit
- At 6.00%: $600 (for a total of $10,600 after one year)
- At 5.75%: $575 (for a total of $10,575 after one year)
- At 5.50%: $550 (for a total of $10,550 after one year)
The bottom line
CD rates are currently high and likely to head higher in the weeks to come. This makes them an effective choice for savers looking to protect their money and grow their bottom line in today’s elevated rate environment. Depending on the amount you deposit into a CD, you could potentially earn hundreds of dollars more on your money each year. Plus, CDs are safe (they’re FDIC-insured up to $250,000 per account) and reliable (CD interest rates are locked for the full CD term, providing savers some much-needed predictability in an otherwise volatile economic environment). Learn more about your CD account options here today!
