When the Federal Reserve meets, we all have questions: What does it mean to me? Will yields on certificates of deposit go up or down? Bankrate is here to help. We’ve looked at five categories — mortgages, home equity loans, auto loans, credit cards and certificates of deposit — to determine if the Fed’s moves made you a winner or a loser. Here’s a look at CDs and money market accounts:

 Winners: CD buyers

CD buyers may not feel like winners when the Federal Reserve’s key short-term interest rate is sitting at 2 percent, but at least the Fed isn’t still cutting rates.

The Fed has been caught between a sagging economy and sharply rising food and energy costs. Hiking short-term rates might check inflation, but it would also raise the cost of borrowing while so many individuals and businesses are struggling — and it would be an extraordinarily unpopular move.

Depositors, of course, want to see the Fed raise rates — heck, it’s a hedge against inflation. But while a Fed action would move CD rates up faster, it’s not entirely necessary at a time like this, when many banks are trying to grow deposits.

Slowly, rates have been rising since May without any help from the Fed. Take a look at the following chart that shows average monthly yields as surveyed by Bankrate.

CD Yields
Date 6-month (%) 1-year (%) 5-year (%)
1/08 3.20 3.24 3.51
2/08 2.54 2.46 2.89
3/08 2.23 2.21 2.89
4/08 1.85 1.94 2.76
5/08 1.86 2.07 2.96
6/08 1.88 2.19 3.24
7/08 1.96 2.29 3.43

Those yields are improving, but they’re still awfully low when inflation is running in the neighborhood of 4 percent — and some say considerably more than that.

Bankrate’s
high yield database has six-month and one-year CDs in the 3 percent to 4 percent range; five-year CDs are paying 4 percent to 5 percent — but it probably isn’t wise to go that far out.

“Most of what I’m buying for clients is in the one- to three-year range,” says Steve Juetten, of Juetten Personal Financial Planning, in Bellevue, Wash. “But people should have a variety of investment vehicles. Don’t just rely on three-month or six-month CDs.”

 Take action

Safety is paramount, but more than ever you need to earn decent yields as inflation rises. Shop around and keep your maturities relatively short so you can take advantage of better rates as they begin to rise.