CD Rates: And You Thought This Was Low....

It almost didn't seem possible, but CD rates edged even lower over the past week, prompting the inevitable question: how low can they go? For savers who've been holding off on committing to a CD because they thought rates were already as low as they could get, the answer may be something of a surprise.

As of April 20th, 1-month CD rates were at 0.37%, and 6-month CD rates were at 1.53%. These numbers were down from 0.47% and 1.67%, respectively, a week earlier. How did they go from low to lower?

The Consumer Price Index (CPI) release was probably a big factor. Word that prices had declined by 0.4% over the prior year gave interest rates additional room to fall. Also during the past week, the Conference Board announced that leading economic indicators signalled a continuing decline in the economy. The best the Conference Board could do by the way of good news was to say that at least the rate of decline might be slowing.

Low inflation and recession both encourage interest rates to fall. So, while today's CD rates might be low, they are consistent with the economic environment. Therefore, it might make sense to lock up the best CD rates you can today -- unless you want to bet on on quick economic recovery.

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