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Could CD rates rise by year-end?

By Sheyna Steiner ·
Wednesday, April 10, 2013
Posted: 5 pm ET

The very loose monetary policy from the central bank that has pushed rates on certificate of deposit to previously unseen depths could be tightened by the end of the year. The Federal Reserve will not raise interest rates, but they could bring an end to the quantitative easing programs that have kept rates slightly lower than they otherwise would be, the minutes from the last meeting of the Federal Open Market Committee show.

In the third round of quantitative easing, the Federal Reserve has been purchasing $40 billion of agency mortgage-backed securities and $45 billion of Treasury securities per month in order to keep interest rates very low.

According to the record of the meeting, many members of the rate-setting group at the central bank believe the purchases could be ended by the close of 2013. Of course, if the outlook for the economy changes in the meantime, their opinions could change. It is good news, though, for savers who may be seeing the beginning of the end of very low CD rates.

Without the added pressure from the bond-purchasing programs, CD rates would likely begin to drift upward over the course of 2014. Don't get too excited though, it probably wouldn't be that much of an improvement. Rates might simply be "low" rather than "ultra-low."

Are you sticking with CDs, or are you moving your money into alternative investments?

Follow me on Twitter: @SheynaSteiner.

Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers.

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