Will CD rates continue to rise in 2023?

Financial Planners


SmartAsset: Will CD Rates Increase in 2023?

SmartAsset: Will CD Rates Increase in 2023?

The Federal Reserve has raised interest rates seven times in 2022 to fight inflation. The Fed has maintained his hawkish stance in 2023, raising rates in his first two Federal Open Market Committee (FOMC) meetings of the year. However, there is some doubt as to whether the Fed will ease rate hikes later this year. This also raises the question of whether Certificate of Deposit (CD) rates will continue to rise throughout the year.

Consider working with a financial advisor to determine where CD fits into your overall investment plan and what to expect in terms of returns.

Will CD rates continue to rise in 2023?

When the Fed raises interest rates, banks tend to raise CD rates as well. However, it is unclear exactly how long the Federal Reserve will continue to raise rates.

In February of this year, the Fed raised interest rates by 25 basis points, from an adjusted 4.5% to 4.75%. And in March, the Fed again raised interest rates by another 25 basis points, adjusting from 4.75% to 5%. There could be more rate hikes in 2023, but experts are debating how many.

At the FOMC meeting in March, Fed Chairman Jerome Powell signaled that he would continue to raise rates if needed, even as summary economic forecasts (SEPs) indicated the need for another rate hike this year. but foresaw a “tightening of credit” and bank cuts. Lending itself could help keep inflation in check and eliminate the need for further rate hikes.

Whether or not there will be a few more rate hikes in 2023, Powell said he expects the Fed’s forecasts for the current year to continue, based on relatively modest growth in the economy and a gradual rebalancing of supply and demand in the labor market. said its plan did not include a rate cut. .

CD rates are likely to rise in the second half of 2023

SmartAsset: Will CD Rates Increase in 2023?

SmartAsset: Will CD Rates Increase in 2023?

Fed rate hikes reached 4.75% in February and 5% in March, and combined with Powell’s comments at the FOMC meeting in March, there are signs that the Fed will continue with at least one rate hike this year. You can And as we approach the 2023 midpoint, the CD rate is also increasing. Some banks are offering yields of 5% or more on short-term CD rates at the time of this writing.

It remains to be seen whether CD rates will remain elevated for the rest of the year. At the moment, however, it may be an attractive option for those looking to deposit some cash in the short term and earn his CD rate of high yield.

Determine which CD rates and conditions are best

If you feel stuck where to put your cash and need a clearer picture of your options, a financial advisor can help you make the right choice. Advisor helps identify savings goals and risk her profile. This expert also explains the pros and cons of CD investments.

CD rates can be offered for terms ranging from 6 months to 10 years. Depending on your savings strategy, an advisor can help you stay disciplined about not touching your money to avoid withdrawal penalties.

Conclusion

SmartAsset: Will CD Rates Increase in 2023?

SmartAsset: Will CD Rates Increase in 2023?

Many signs point to the Fed raising rates in 2023. Besides, Powell doesn’t believe in rate cuts in the near future. This is good news for those who want to take advantage of today’s high CD rates. However, markets are always changing and the Fed may change course. A financial advisor can help you navigate your portfolio to reach your savings goals for 2023 and beyond.

investment tips

  • Whenever you are considering a particular type of investment, we encourage you to consider working with a financial advisor. An advisor can help you choose the right investments and make sure you’re on track to reach your financial goals. SmartAsset’s free tool matches you with up to 3 vetted financial advisors serving your area and allows you to interview advisor matches for free to determine which advisor is right for you. increase. If you’re ready to find an advisor who can help you reach your financial goals, get started today.

  • If you’re trying to determine what your potential returns look like on a CD or another investment, consider using SmartAsset’s free Investment Return and Growth Calculator.

Photo credit: © iStock/Andrii Dodonov, © iStock/designer491, © iStock/Inside Creative House

The post Will CD Rates Continue to Rise in 2023? First appeared on the SmartAsset blog.

first published



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *