Get your finance in order, with wealth management's must-read stories everyday!

CD Interest Rates Forecast: How high will CD rates go in 2023?

Susan Kelly

Oct 03, 2023

Within the dynamic realm of financial markets, the appeal of Certificate of Deposits (CDs) continues to be robust for investors who desire a secure repository for their capital. The keen interest in projecting CD interest rates for the upcoming year, 2023, has garnered noteworthy focus. This attention stems from the collective effort of individuals and organizations to assess the potential gains from their investments.

What are CD Interest Rates?

Certificate of Deposits, commonly referred to as CDs, are financial products offered by banks and other financial institutions. They are popular among investors seeking a balance between security and returns. CDs are considered safer than stocks and bonds because they offer a fixed interest rate and a predetermined maturity date.

CD Rates Forecast: What Factors play an important role in This?

Federal Reserve Policy

The direction CD interest rates takes is significantly influenced by the strategies enacted by the Federal Reserve. The choices made by the central bank pertaining to the federal funds rate distinctly reverberate through the rates extended by financial establishments. Should the trend of the Federal Reserve hiking the federal funds rate persist into 2023, a corresponding adjustment in CD rates is a plausible outcome.

Inflation Outlook

Inflation strongly affects interest rates. If inflation rises in 2023, the Fed may raise its target interest rate. This would undoubtedly raise CD rates, answering investors' "how high will CD rates go in 2023" query.

Economic Growth

The overall health of the economy also influences CD rates. If the economy is projected to experience robust growth in 2023, financial institutions might offer higher CD rates to attract deposits and fund lending activities.

Market Competition

The competitive landscape among banks and financial institutions also plays a role in CD rates. When institutions vie for deposits, they may increase CD rates to entice savers, creating a favorable environment for investors seeking better returns.

CD Interest Rates Forecast: Trends in CD Interest Rates for 2023

CD Interest Rates Forecast over the forthcoming months is challenging; however, the following insights offer two potential scenarios for CD rates in the year 2023.

Bank Strategies Shaping CD Rates

Financial institutions naturally prioritize their financial gains, leading to a strategic divergence between mortgage rates and CD rates, resulting in improved profitability. As the previously elevated inflation rate subsides from its peak in 2022, both mortgage and CD rates are anticipated to decrease, albeit at varying rates.

While 2022 saw a considerable uptick of more than three percentage points in mortgage rates, the corresponding increase in average CD rates was limited to around 2%. In the duration of 2023, banks are likely to accelerate the rise of mortgage rates in comparison to CD rates, aiming to sustain their profit margins.

Treasury Bond Yields Surpassing CD Returns

Even though CD rates are projected to maintain an upward trajectory, they may not parallel the advancements seen in Treasury bonds. At present, Treasury bonds exhibit relatively robust returns. As of August 2023, yields for one- and five-year Treasury bonds stand at 5.33% and 4.29%, respectively.

The gradual adjustment of CD rates by financial institutions can result in rates at your bank paling in comparison to the returns from Treasury yields. There exists a motive for banks to respond with a measured pace to Federal Reserve rate hikes concerning savings products. Banks utilize deposits such as CDs to fund investments in Treasurys and loans. Consequently, the lower the interest they pay, the more lucrative their gains become.

How Much Higher Can CD Rates Possibly Go in 2023?

The CD rate increases in 2023 hinge on the Federal Reserve's course of action regarding potential adjustments to the federal funds rate and the magnitude of those adjustments. Historically, premier CD rates have tended to align closely with the upper thresholds of the designated federal funds rate range. Should there be a resurgence in inflation, it is plausible that the Federal Reserve may choose to elevate its targeted interest rate, subsequently prompting an upward shift in CD interest rates.

Potential Impact on Investors

The CD Interest Rates Forecast for 2023 can have a tangible impact on various types of investors. The following are some of them:


Savers and risk-averse individuals are likely to closely monitor the CD rates forecast. Higher CD rates can provide a more attractive option for parking their funds, especially if they are concerned about market volatility.


Retirees often seek stable sources of income. Positive CD rates forecast for 2023 might offer retirees a viable avenue for generating steady income during their post-employment years.

Investment Diversification

Investors who believe that CD rates will rise significantly in 2023 might choose to diversify their portfolios by allocating a portion of their funds to CDs. This strategy can help balance risk and potentially yield attractive returns.

Opportunity Costs

On the flip side, some investors might choose to allocate funds to other investment vehicles if they anticipate that CD rates will not rise substantially. This decision would be based on the opportunity cost of tying up funds in CDs versus other potentially higher-yielding options.

Final Words

Predicting the future in finance is difficult. However, the 2023 CD rates estimate is crucial for investors. Also, the answer to "How high will CD rates go in 2023?" depends on Federal Reserve policy, inflation forecasts, economic growth, and market rivalry. Investors should remember that CDs give security and rewards while waiting. Investors seeking to navigate CD interest rates in 2023 must monitor developments and make educated selections. Whether one seeks stability, income, or diversity, the fluctuating CD rates projection will impact investing plans in the next year.

Related Stories

Privacy Policy | Terms of Use

© 2023

Contact us at: [email protected]