What’s the CD interest rate forecast for 2025?

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The CD interest rate landscape could change significantly this year, experts say.

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The economy continues to remain strong, with unemployment holding steady at 4.1% in December. However, at 2.7%, inflation was up slightly as of the latest reading. As a result, the Fed now projects a lower number of rate cuts will occur this year.

The Fed rate can have an impact on the rates you earn with savings accounts like certificates of deposit accounts and yield-high savings accounts, so any moves the Fed makes this year can help to determine the kinds of returns you’ll earn on your deposits. 

So how could the Fed’s moves — and any other economic changes that occur — impact the CD account interest rate landscape this year? Here’s what experts say could happen with CD rates in 2025.

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CD account interest rates will drop

“As we look ahead into 2025, lower CD interest rates are a possibility,” says Ben Alvarado, executive vice president at California Bank and Trust. 

After all, the Federal Reserve lowered its benchmark rate three times in 2024, and many analysts expect there to be at least two more Fed rate cuts in 2025.

“CD rates are directly influenced by the federal funds rate,” says Ryan A. Hughes, founder and portfolio manager at Bull Oak. “If the Federal Reserve decides to drop these rates due to economic concerns, CD rates will be impacted as banks face less competition for deposits due to cheaper access to capital.”

If CD interest rates do drop, it’s likely because the economy isn’t performing as well as expected. 

“A few things typically can lead to a downward trend for traditional CD rates — slowing or declining inflation, a lower demand for credit, or slowing economic growth. Sometimes policy changes from government intervention can cause rates to drop as well,” says Bob Chitrathorn, vice president of wealth planning at Simplified Wealth Management.

Alvarado says that lower CD rates present a good opportunity to diversify your financial strategies. For instance, you could consider laddering your CD to take advantage of higher interest rates with long-term CDs while maintaining liquidity with short-term CDs. 

Find out how much you could earn with the right CD account today.

CD account interest rates will stay the same

For CD rates to stay the same in 2025, the current economic conditions would have to remain steady in terms of a variety of factors, including “steady inflation rate, balanced economic growth, stable employment levels, the Fed remaining neutral on its monetary policy, and no surprises in the economy,” says Chitrathorn.

Hughes says that if the current economic trends remain stable, he expects CD rates to stay mostly the same in 2025. 

“The market is always forward-looking and trying to price in potential outcomes. So, if interest rates are to stay the same in 2025, this would mean that the Federal Reserve thinks the U.S. economy is performing as expected,” Hughes says.

If CD rates stay the same, investors can count on more predictable returns

“In a static rate environment, the goal remains the same, so you should align your financial strategies with individual goals to maximize saving opportunities,” Alvarado says.

CD account interest rates will rise

For CD interest rates to rise in 2025, the Fed would have to reverse course and begin raising interest rates again. 

“This would mean that either the U.S. economy is too hot or that inflation has reared its ugly head again,” says Hughes. “This is certainly a possibility as AI adoption continues, and there is a high likelihood of higher tariffs and a trade war. All of this is inflationary, which would result in higher CD rates.” 

If CD interest rates do go up, Alvarado recommends taking advantage of short-term CDs

“This strategy allows clients to take advantage of higher rates in the near future while still earning competitive returns in the short term,” says Alvarado.

However, Chitrathorn thinks this scenario is unlikely. 

“As of January 2025, certificate of deposit (CD) rates have been experiencing a downward trend, influenced by recent Federal Reserve policy decisions. Various projections seem to suggest that rates may go as low as 2.5% by 2026. But we won’t know until we know,” Chitrathorn says.

The bottom line

Depending on what happens with the economy, savings rates could continue to gradually decline in 2025 as the Federal Reserve continues cutting interest rates. That’s why now may be a good time to lock in a higher CD rate while they are still readily available. If you’re trying to build an emergency fund or save up for a big expense, depositing money on a CD can be a great way to make that happen. Just make sure you shop around and compare your options so you can find the best CD terms and yield possible. 

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