What's the CD interest rate forecast for May 2025?

Understanding where CD rates could head this May is important if you want to stack up the returns on your savings. Getty Images

Certificates of deposit (CDs) offer savers a stable place to lock up their savings funds for a set term. In return for holding the funds until maturity, savers get the predictability of a fixed rate of return on their money. During the current high-rate climate, CD interest rates have been lucrative, especially in the short term. So far this year, the Federal Reserve has kept the federal funds rate paused rather than slashing rates, which has positively impacted CD rates. 

But right now, we're days away from the next Fed meeting — and the next Fed rate decision — and both consumers and economists alike are waiting and wondering what the next move may be. The latest inflation report showed more cooling while the recent jobs report came in better than expected. To find out how these and other factors could impact the CD rate climate, we spoke to banking and credit union experts to learn their expectations for where CD account interest rates could head in May 2025. 

Lock in a top rate on a CD today.

What's the CD interest rate forecast for May 2025?

The Federal Open Market Committee (FOMC) will meet this month, which may have an impact on the CD rates being offered to savers. Until we know for certain, here are the potential scenarios experts say could occur regarding CD interest rates:

CD account interest rates will drop (and why)

Analysts believe that it's highly unlikely changes will occur to the federal funds rate at the May Fed meeting, according to the CME FedWatch tool. However, if the Fed does opt to lower the federal funds rate this month, interest rates on certificate of deposit accounts are likely to follow. 

But while May might not be the month that experts are targeting for major rate movement, many people foresee future rate cuts by the end of the year. And that, in turn, could have at least a slight impact on CD rates now.

"We have observed in the marketplace a mixture of seeing rates either going down with some competitors or staying the same," says Leah Evans, director of product management at Georgia's Own Credit Union.

Derik Farrar, head of consumer deposits for US Bank, notes that future rate cuts are anticipated, which is leading to some preemptive CD rate drops. 

"I think you're seeing most of, if not all of the large banks, have been both kind of shortening terms and then bringing rates down, kind of in the anticipation that we're going to get something from the Fed over the summer or the fall," says Farrar.

Find out how much you could earn by opening a CD now.

CD account interest rates will stay the same (and why)

The Federal Reserve is likely to keep interest rates frozen in May, given the ongoing economic uncertainty and the focus on further tempering inflation. And that, in turn, could mean CD rates stay the same this month — at least for the most part, experts say. 

"We have noticed that CD rates have remained the same in some markets, just because of the Fed funds rate not changing … there's such an uncertainty in the economy with all of the different events that are going on and the CD rates could stay the same," says Evans. 

If you're focused on getting the highest CD yields, locking in a rate now could be a smart move. 

If you're "not in need of the funds for the next year, it might be a good time to look around because it is projected that the rates might possibly fall in the summer, either June or July," Evans says. 

Once the Fed lowers rates, CD rates will likely drop in tandem and won't be as competitive. 

CD account interest rates will rise (and why)

In general, experts say there's not much of a possibility that CD interest rates will increase in May. 

"There'd have to be, I think, a pretty dramatic shift in expectations of the Fed's path on rates," says Farrar.

Evans concurs, stating that CD interest rates would only rise if the Fed also increases rates and financial institutions follow. If that were the case, there would be a domino effect. 

"In order to remain competitive in the marketplace, that would cause other financial institutions to raise their CD rates," says Evans.

The bottom line 

The current CD account interest rate forecast indicates that it's likely rates will likely stay steady or drop this May — but that doesn't mean savers are out of luck in terms of good CD returns. Right now, shorter CD account terms often come with higher interest rates. There are "not a lot of particularly attractively priced CDs over 12 months now in the market just because there's so much uncertainty," Farrar explains.

As you weigh your options, though, just be sure to compare a variety of CD accounts and read the fine print on early withdrawal penalties. While CD rates are generally more favorable than savings interest rates and they don't change during the term, withdrawing funds before the maturity date can result in penalties. For additional liquidity, you can combine certificate of deposit accounts with high-yield savings accounts.