US CD rates slide as Federal Reserve cuts anchor yield curve
Certificate of deposit yields are retreating from their peaks following the Federal Reserve’s rate cut cycle, with the best short-term offers now clustering between 4% and 4.5% APY.
Certificate of deposit rates in the United States are declining from their recent highs as the Federal Reserve implements a series of interest rate reductions. The downward trajectory follows the central bank’s decision to begin cutting rates in September 2024, with three additional reductions announced in 2025 as inflation is deemed under control.
As of Wednesday, May 27, 2026, the highest available rate is 4% APY, offered by Marcus by Goldman Sachs on a 14-month CD. Best short-term CDs with terms between six and 12 months generally offer rates ranging from 4% to 4.5% APY. This marks a shift from the peak rates seen during the previous tightening cycle, where the Fed hiked rates 11 times between March 2022 and July 2023 to combat spiralling inflation.
The CD yield curve is currently flattening or inverted, with the highest average rate applying to a 12-month term rather than longer-term instruments. This structural change contrasts with historical norms where longer maturities typically commanded higher yields to compensate for risk. The inversion suggests investors may be pricing in expectations of future rate declines or economic uncertainty.
Historical context underscores the volatility of the current environment. CD rates fell significantly in the early 2000s and hit lows of 1% APY for one-year terms in 2009 following the Great Recession. Rates dropped further to 0.1% APY for six-month CDs in 2013 before recovering slightly between 2015 and 2018. The onset of the pandemic in early 2020 triggered emergency cuts that pushed rates to record lows, before the subsequent aggressive hiking cycle reversed the trend.
Financial experts suggest that with the next Federal Reserve meeting approaching and another rate cut likely, it is an opportune time for investors to lock in current rates. Online banks often provide higher interest rates than traditional brick-and-mortar institutions due to lower overhead costs, though FDIC or NCUA insurance remains a critical consideration for depositors seeking safety.
