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As homebuyers know in today’s market, timing is everything. For example, if they had traded in 2020 or 2021, they would have an ultra low mortgage or mortgage refinancing interest rate. However, in the coming years inflation rose and prices has more than doubled and is currently hovering around the highest point since 2000. So it is crucial to act when the opportunity presents itself.
This also applies to savers and people who want to benefit from the current high interest rate environment. By opening a savings with high returns or certificate of deposit (CD) In recent years, savers have been able to earn exponentially more than if they had taken action when interest rates were low.
However, the timing around a CD opening is also crucial to get right. And despite some cooling of inflation, this is still a good time to get started. And there are a few compelling reasons why savers might be willing to open an account next week, in mid-June. Below we highlight two of them.
See how much more you can earn with a top CD account here.
Why you should open a CD in mid-June
If you’re considering opening a CD in this inflation cycle, the timing could be right to take action next week, specifically on June 12 and 13. This is why:
The next inflation report will be released
The Bureau of Labor Statistics’ inflation reports for 2024 have been mixed so far, with most showing little progress in further reducing inflation. After increases in March inflation hardly fell in April, from 3.5% to 3.4%. That’s more than a full percentage point above the Federal Reserve’s 2% target.
But a new inflation report will be released on June 12, revealing the latest progress toward curbing inflation. If that report is as disappointing as many of the other releases this year, it could signal a “higher rates for longer” approach from the Federal Reserve. And if the report is particularly problematic, it could lead to the Fed raising rates – already at the highest level in 23 years – even higher to complete the cooling of this inflation cycle.
If either happens, savers should be prepared to take advantage of the interest rate environment (CD rates change often) by recording the fastest CD speed they can find. Because the interest rate on these types of accounts is fixed, savers can earn high returns for months and even years, even if inflation and interest rates fall in the future.
Start shopping online for the right CD today.
The Fed’s next interest rate announcement will be released
Ironically, the Federal Reserve will release its latest announcement on the future of interest rates on the same day the latest inflation report is released. But a formal increase in the federal funds rate (currently between 5.25% and 5.50%) does not necessarily have to happen for CD rates to rise.
Even a simple indication that interest rate cuts will be postponed until later in the year or postponed until 2025 and beyond could cause a slight increase in what lenders are offering on savings instruments. So those looking for a CD should be prepared to take action on both June 12 and June 13, after the inflation data reveal and Fed announcement have had a chance to reverberate through the broader economy.
And even if the Fed announces an imminent cut – which seems unlikely at this stage – it will almost certainly be minimal (25 basis points to start). Although that could potentially reduce what you can make from a CD since there are many of them rates above 5% at this point, it is still worth opening for many savers.
it comes down to
This month of June offers savers a rare opportunity to benefit from both inflation and the Fed’s interest rate actions – on the same day. However, it will take some time to research your options and understand which lenders offer the best rates and terms. So consider starting now so that you are prepared to act when the opportunity arises. And think about it carefully advantages and disadvantages of CDs at this time, because depositing too much money could ultimately result in paying a early withdrawal penalty to get your money back.
Read more about the best CDs of the moment here.
