how high will cd rates go?

[frank]

just curious to see what some of the knowledgeable members think about how high the cd rates will climb this year. any ideas or thoughts?

 

[ShokWaveRider]

It would be nice if they finally pulled their fingers out and got with the inflation program. They seem to be as slow as the FED in getting things right.

My opinion is they are used to cheap money and are struggling to give it up. Just my Opinion, I could be wrong.

 

[jebmke]

It would be nice if they finally pulled their fingers out and got with the inflation program. They seem to be as slow as the FED in getting things right.

My opinion is they are used to cheap money and are struggling to give it up. Just my Opinion, I could be wrong.

I think banks are awash in cash and don't need the money. But a quick check of their balance sheets would confirm that.

 

[Car-Guy]

Well we are already in May... So only about 7 months to go and CD's tend to rise slowly after the Fed does their thing.

My WAG for 1 to 3 yr CD averages would be 3 to 3.5%. Maybe a few higher.

 

[target2019]

Based on Fed statements made, it is supposed to be +3% this year over previous.

https://www.bankrate.com/banking/federal-reserve/how-much-will-fed-raise-rates-in-2022/

 

[frank]

think it will get close to 4% on a 5 year cd?

 

[Car-Guy]

^^^^ Maybe for a few banks

 

[bobandsherry]

Banks are only interested in CDs when they need money to support their lending. And then only when it's cheaper than borrowing from the Fed window or they exceed the Fed window borrowing limits. With increased loan rates loan demand will most likely drop, so it may be a long time before banks are in a position to require deposits and compete on rates.

 

[jebmke]

Banks are only interested in CDs when they need money to support their lending. And then only when it's cheaper than borrowing from the Fed window or they exceed the Fed window borrowing limits. With increased loan rates loan demand will most likely drop, so it may be a long time before banks are in a position to require deposits and compete on rates.

agree; loan demand will drop and they might even start clipping the tail off the risk curve on what they issue (e.g. mortgages and car loans). Banks and businesses will start to hoard cash as they see the economy slow down.

 

[ShokWaveRider]

One's best bet is MYGAs as a substitute equivalent/alternative to CDs. They increase with the 10 year Treasury and pay on average ~1% more.

 

[OldShooter]

I remember buying a 17% GIC back in the early 80s. Tell me what inflation will be doing over the next few years and I'll start guessing at CD rates.

 

[VFK57]

Based on Fed statements made, it is supposed to be +3% this year over previous.

https://www.bankrate.com/banking/federal-reserve/how-much-will-fed-raise-rates-in-2022/

We will be very lucky if inflation would stay as it is.

Based on my experience last year, buying a new car, I would guess that inflation would jump higher. The supply chains only had worsen much more since last year, fueled by Ukraine war, Chinese COVID shut down and our enormous Debt what will require much bigger chunk of our Budget (we also have enormous deficit what needs to be covered somehow). There would be less goods for all the money we print. I am not waiting for the 3% CDs to reload at maturity and buying Farm land (syndicated) instead.

 

[Dtail]

think it will get close to 4% on a 5 year cd?

4% is my thought on where the 5 year CD will top out, but who knows.

 

[target2019]

Based on Fed statements made, it is supposed to be +3% this year over previous.

https://www.bankrate.com/banking/federal-reserve/how-much-will-fed-raise-rates-in-2022/

We will be very lucky if inflation would stay as it is.

Based on my experience last year, buying a new car, I would guess that inflation would jump higher. The supply chains only had worsen much more since last year, fueled by Ukraine war, Chinese COVID shut down and our enormous Debt what will require much bigger chunk of our Budget (we also have enormous deficit what needs to be covered somehow). There would be less goods for all the money we print. I am not waiting for the 3% CDs to reload at maturity and buying Farm land (syndicated) instead.

Good points, and I'm also of the mind that inflation won't be fixed by just 3% of rate increases.