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Time lag between Fed rate hike and CD rates
Old 01-09-2019, 11:55 AM   #1
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Time lag between Fed rate hike and CD rates

Is there a general rule of thumb as to how long it takes a Fed Interest rate increase to trickle down to higher CD rates? I realize nothing is instant with these rate changes but a few local banks in my area have had rates around 2.90% on 18 month CD's for a couple of months now and I'm sort of hoping to at least hit the 3% mark on an up coming CD I have.

Not looking for a longer period which I know comes with higher rates.

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Old 01-09-2019, 12:36 PM   #2
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The markets (and thus banks) don't believe rates are going to continue to rise despite what the Fed said, so they are pulling back rates, not raising them... Some are even forecasting rate cuts in 2019, so banks seem to be "rounding the corner" down.

An example from Goldman Sachs

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Old 01-09-2019, 12:55 PM   #3
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vanguard is offering 3% on 3 year cd's. earlier last year I was able to get 3.25% on a 3 year from them. I agree that it looks like a retreat for interest rates, but that kind of argues to me that we really don't have much of a liquidity issue
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Old 01-09-2019, 01:42 PM   #4
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Thanks, I guess that shouldn't surprise me.
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Old 01-10-2019, 06:45 AM   #5
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The FOMC only controls the overnight rate. Rates on treasuries, CDs and money markets are set by markets.

They don't necessarily move in lockstep with each other.
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