How far will CD rates fall if the Fed cuts rates? Here’s what experts say

Inflation has been high for years now, and while it’s decreased quite a bit from its peak of 9.1% in June 2022, it’s still below the Federal Reserve’s target goal of 2%. To move the needle and curb spending further, the Fed has kept interest rates paused at a 23-year high at its last three meetings.

While that’s bad for consumers using credit cards, mortgages and loans, as higher rates mean paying more in interest on the money borrowed, it’s a boon for savers, resulting in hefty interest rates on savings accounts and certificates of deposit (CDs).

What goes up must come down, though, and at some point, the Fed is likely to make rate cuts once inflation is under control. While the Fed rate doesn’t directly impact the rates on savings accounts and CDs, the two generally move in the same direction. So the question remains: How long will these high CD rates last? And if the Fed does cut rates, how far will CD rates have to fall?


continue reading »