As the Federal Reserve's interest rate policy remains uncertain, many banks are raising the yields on their certificates of deposit, with 16 banks increasing their maximum CD yields recently. PNC Financial led this trend by raising its 7-month CD yield by 50 basis points to 4%.
Jefferies analyst David Chiaverini noted that the competition for deposits is intense, with banks likely facing upward pressure on funding costs through the second half of 2026. The current federal funds rate is between 3.5% and 3.75%, and futures trading indicates a 40% chance of a rate hike in September. Meanwhile, 6-month Treasury bill yields have also increased.
Other banks, such as Bread Financial and Popular Direct, are now offering 1-year CDs with yields of 4.25%. However, investors should be cautious as breaking a CD early incurs penalties, and these yields may not keep pace with inflation over time. It's essential for savers to consider their liquidity needs and shop around for competitive rates upon renewal