bank rates

Highest CD Rates Roundup For Oct. 18

Bringing you the very best CD rates from credit unions and local banks.John C. Williams, president of the Federal Reserve Bank of San Francisco, this week offered a good recap of how the Fed arrived at its policy for keeping short-term interest rates low — and when it will begin to raise them.

Unfortunately, Williams doesn’t offer any encouraging news for savers. But he does, I think, provide as good an explanation as I’ve read for how the nation’s central bank communicates its intentions.

Go read the whole thing.

“Forward guidance” is Fed-speak for the predictions the rate-setting committee has made since it set short-term interest rates near zero in December 2008.

The result is the moving goal posts I wrote about last week that has had the Fed occasionally altering its predictions for when it might increase the federal funds rate, which influences all sorts of other short-term interest rates, like CD rates, for example.

Williams, a non-voting member of the Federal Open Market Committee, writes that “these projections improve public understanding of Fed thinking.”

But since the Fed has changed the projections as much as it has, I find it increasingly difficult to believe what the central bank has to say. When people like Bill Gross say interest rates will remain depressed for decades, it sounds plausible because we’re already beyond the Fed’s original “forward guidance” date.

Williams acknowledges this flaw in the Fed’s communication strategy:

“While forward guidance brings with it a number of benefits, it is also necessary to acknowledge both its limitations and some potential drawbacks. First, efficacy depends on credibility. In severe downturns, the likes of which we have recently experienced, appropriate forward guidance can stretch years into the future. Public credulity may be tested by statements relating to events so far off, particularly when policy makers may be different than the ones making assertions today.”

Williams says 14 of 17 rate-setting committee participants believe the federal funds rate won’t be lifted until at least 2015.

At this point, I’m just not going to hold my breath.

On to what’s happening now. This week, we added one deal to our list of the highest CD rates from credit unions and local banks:

  • San Francisco Federal Credit Union (www.sanfranciscofcu.com) pays 1.00% APY on 10-month CDs with a deposit of $1,000 to $100,000. Should rates rise, you’ll also get a chance to bump yours up once during the term. Membership is open to residents of San Francisco and San Mateo counties.

As for existing deals on our list, we had just two changes.

San Antonio Federal Credit Union increased rates on its 84-month CD from 2.10% APY to 2.15% APY.

And Crescent Bank and Trust in New Orleans cut its 36-month CD rate from 1.55% APY to 1.41% APY. We removed this deal from our list.

You’ll find the top-paying deals clearly marked on our highest CD rates page, showing where they are available, with a quick link back to the original post, which includes more information on the institution and its requirements.

We’ll update this page weekly, so you’ll always know what great deals are out there from credit unions and local banks.

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