how are cd rates determined 
the federal reserve s rates play a large role in what you earn on your deposits 1 that s because the fed s decisions can directly affect a bank s costs here s how it works every six to eight weeks the federal open market committee fomc decides whether to raise lower or hold the federal funds rate 2 this rate is the interest that banks pay to borrow and lend their excess reserves to each overnight through the fed 3this benchmark rate influences what banks and credit unions are in turn willing to pay consumers for their deposits in savings money market and cd accounts the higher the federal funds rate the more interest you can earn on a cd in december 2008 the fed reduced its rate to the lowest level possible of essentially zero as a stimulus to lift the u s economy out of the great recession it left rates anchored there for a full seven years 1 during that time deposit rates of all kinds savings money market and cds tanked the fed did the same in 2020 in 2022 amid record setting inflation the fed aggressively raised interest rates between 2021 and 2023 average cd rates tripled or quadrupled depending on the term 45