What's the CD interest rate forecast for November 2024?
When it comes to earning interest with little risk, certificates of deposit (CDs) tend to be a good option, though they require you to commit to investing for the duration of the CD term to avoid early withdrawal penalties. The upside is that you also lock in your CD rate until the CD matures. When you qualify for a good CD rate, that's a huge benefit as your investment is FDIC insured, so it's very low risk, and it provides a generous guaranteed ROI.
In the post-pandemic era, rates soared as the Federal Reserve repeatedly raised the benchmark interest rate in response to record-high inflation. In turn, CD rates climbed to recent record highs, driving increased investor interest.
The Fed has now changed course, though, dropping rates by 50 basis points at the recent September meeting and signaling that further cuts are coming throughout the end of 2024 and into 2025 — with the next one widely expected to happen at the Fed's November meeting. With rate reductions anticipated, many investors have questions about how CD yields will trend in the coming months.
Find out what today's top CD rates are now.
What's the CD interest rate forecast for November 2024?
We've talked to some experts about what to expect in November to give you an idea of where things stand.
Short-term CD rates are expected to drop
CD rates have already fallen from their highs in the post-pandemic era, and most experts believe that's likely to continue into November — especially for certain types of CD products.
"In November, short-term CD rates are likely to continue their downward trend, as the Fed is expected to announce further decreases to their target federal funds rate at the November FOMC meeting," says Jonathan Ernest, an economics professor at Case Western Reserve University.
Ernest points to the current movement in rates to justify his prediction, explaining that "we saw returns for most CD durations decrease in October as the Fed began a rate-cutting cycle. With markets anticipating another 25-basis point reduction in the federal funds rate in November, spurred on by slower price increases but tempered by a still reasonably tight job market, returns on investments in CDs will likely decrease as well."
Chad Gammon, CFP and owner of Custom Fit Financial agrees, pointing to the same reason for a projected decline.
"For November, CD rates are forecasted to continue a downward trend. This lowering of rates would occur with the Federal Reserve's rate cut and lowering inflation," Gammon says.
Compare the best CD accounts available to you here.
Rates could move higher
Although there's clearly reason to believe rates will drop in November and beyond, there's no uniform consensus on this issue — especially for longer-term CDs.
"If recent market events — especially those pertaining to interest rates — have taught us anything, it's that forecasting rates is a very difficult thing to do," says Jeff DeLarme, CFA, CFP and president of DeLarme Wealth Management, Inc. "I wouldn't be surprised if rates on short-term CDs moved lower in the month ahead, but I'm also not convinced they couldn't move higher."
Rate trends may also diverge for long- and short-term CDs, especially considering that the Fed rate cuts don't have a uniform impact on these two related products and other factors may play a bigger role in driving the yields that long-term CDs offer.
"In my opinion, the longer the CD, the more rates are likely to be driven by supply and demand and other economic factors," DeLarme says.
"For long-term holdings, the effect is a little less clear. We saw rates for 30-year mortgages begin to fall, but then creep back up, even after the Fed's rate-cutting in October. Similar uncertainty may seep into the market for long-term CDs, as these returns are not as tightly correlated to changes in the federal funds rate as are short-term CDs," Ernest says.
This uncertainty may frustrate CD investors who've enjoyed a long run of record-high rates. However, for those displeased by the current trends, there's a simple solution.
"If you're looking at purchasing a CD, locking in higher rates now is an option. Or, using a CD ladder to spread maturity dates would help with the impact of any future declines," Gammon says.
The bottom line
The reality is that CDs remain a safe option with rates still high by historical standards. This advice is worth considering in an uncertain market. Investors can find options by checking out the best long-term CDs to open before the next rate cut so they can lock in at today's rates and worry less about fluctuations during a time of economic uncertainty.
