CD Rate Trends This Week: Nov. 17


Certificate of deposit rates pulled back further last week, in an economic environment where policymakers are in no rush to raise interest rates, and banks and lenders aren’t in a position to follow suit.

For the week, not a single CD rate category pushed upward. Down at the low end, three-month CD rates fell to 0.42% from 0.44%, while six-month CDs slid to 0.64% from 0.67%.

One-year CDs sunk, as well, to 0.99% from 1.02%, and two-year CDs fell to 1.44% from 1.47%. Four-year models dug a deeper hole, falling to 1.92% from 1.97%, and five-year CDs treaded water at 2.28%.

All updated rates come courtesy of the BankingMyWay Weekly CD Rate Tracker.

These scenarios shouldn’t change any time soon — not as long as the Federal Reserve promises to keep interest rates down. That’s exactly what Fed Chairman Ben Bernanke said this week. Appearing at the Economic Club of New York on Monday, Bernanke told his audience that the Fed was determined to keep rates down as long as it would take until the economy perked up again.

There may be one way out, but it’s not exactly the path of least resistance. The dollar is currently being hammered in global currency markets, marking double-digit declines during the past six months. Typically, lower interest rates put downward pressure on the dollar which, at this time, isn’t viewed as a major danger by economists. In fact, it might even help spur the economy.

Here’s an example: As Bernanke pointed out in his New York speech, commodities like oil and gas are priced in dollars, so they’re cheaper to buy when the dollar is in decline. When consumers and businesses buy more oil, for example, that helps the economy, which is the Federal Reserve’s “big picture” priority right now (dollar be damned). Bernanke, after all, said "we use our interest rate tools to try to meet our mandate — full employment and price stability.”

The fact that the weakening dollar makes exports cheaper also contributes to the U.S. economy, making the Fed even less likely to raise rates to buck up the dollar.

Of course, the Fed can’t let the dollar go into free-fall. That would likely lead currency investors to dump the dollar and really put the U.S. economy between a rock and a hard place. But foreign investors are between a rock and a hard place, too. Take China, which is the single largest investor in U.S. assets. A declining dollar threatens those investments, and that’s a legitimate concern to the Chinese government. China is also the third-largest seller of consumer goods to the U.S., so if it pulled out of its U.S. investments in a major way, that would not only hurt the U.S. economy, it would strike a blow against the Chinese economy, too — given all the computer equipment and blue jeans we buy from the Asian Tiger.

Consequently, the status quo is the best option for U.S. policy makes and foreign investors — if not for domestic bank CD investors. That won’t change before the Fed’s Open Markets committee meets in mid-December, where the decision will likely be made to hold interest rates steady. So look for more of the same going forward, at least for a month.

Some banks will raise CD rates anyway, if only to get new customers in the house before the economy improves. Find the ones with the best deals at BankingMyWay. There you’ll find some of the best CD rates out on the marketplace, all at the click of a few keystrokes.

Right now, that’s the best move a CD investor can make. Unless you count waiting for the glacial-minded Federal Reserve to act as a “good move.”

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at

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