CD Rates After Fed Rate Cuts: Historical Data
Current Fed funds rate context (June 2026)
Fed funds at 4.25-4.50%, last cut -25 bps in April 2026. Next FOMC: July 29-30. Top 5-yr CD: 4.55-4.65%. Top 1-yr CD: 4.55-4.80%. Curve is slightly inverted.
Historical CD rate response: every Fed cutting cycle since 1990
2019-2020 cycle
| Date | Fed funds | Move | Top 5-yr CD APY |
|---|---|---|---|
| July 2019 | 2.25-2.50% | — | 3.10% |
| August 2019 | 2.00-2.25% | -25 bps | 2.85% |
| October 2019 | 1.75-2.00% | -25 bps | 2.55% |
| December 2019 | 1.50-1.75% | -25 bps | 2.25% |
| March 2020 (COVID) | 0.00-0.25% | -150 bps | 1.30% |
| September 2020 | 0.00-0.25% | — | 0.85% |
Lesson: Top CD shelf fell from 3.10% to 0.85% over 14 months — a 73% drop in yield. The first three -25 bps cuts caused 85 bps of CD shelf drop. The subsequent -150 bps emergency cut caused another 130 bps drop. Crisis cuts move faster than measured-pace cuts.
2007-2009 cycle
| Date | Fed funds | Top 5-yr CD APY |
|---|---|---|
| July 2007 | 5.25% | 5.40% |
| September 2007 | 4.75% | 4.95% |
| December 2007 | 4.25% | 4.50% |
| March 2008 | 2.25% | 3.85% |
| October 2008 | 1.50% | 3.25% |
| December 2008 | 0.00-0.25% | 2.50% |
Lesson: Fed cut from 5.25% to 0.25% in 18 months (-500 bps). Top 5-yr CD shelf fell from 5.40% to 2.50% — a 54% drop. CDs absorbed about 58% of the Fed move on the 5-year shelf.
2001-2003 cycle
| Date | Fed funds | Top 5-yr CD APY |
|---|---|---|
| January 2001 | 6.50% | 6.10% |
| April 2001 | 4.50% | 5.35% |
| December 2001 | 1.75% | 4.45% |
| November 2002 | 1.25% | 3.85% |
| June 2003 | 1.00% | 3.30% |
Lesson: Fed cut 550 bps in 30 months. Top 5-yr CD shelf fell 280 bps — slower than the front end because the long end already priced in cuts.
The pattern across all three cycles
- The 5-year shelf falls 50-65% of the Fed move over the full cutting cycle. The 1-year shelf falls 80-90%.
- First three cuts cause the largest absolute CD drops. By cut #5 or #6, the curve has fully repriced.
- Recession-triggered cuts move faster than insurance cuts. 2008 and 2020 saw the steepest, fastest drops.
- Brokered CDs reprice faster than bank CDs. Brokered shelves move within days; bank CDs within weeks.
- The bottom of the CD shelf often lasts longer than people expect. 2009-2015: top 5-yr CD stayed below 2.50% for six years.
2026 cycle: where are we in the pattern?
Fed peaked at 5.25-5.50% in 2024. Now at 4.25-4.50% after three cuts. Top 5-yr CD at 4.55-4.65%. If history repeats:
- 3 more cuts (to 3.50-3.75%) would drive top 5-yr CD to ~3.85-4.05%.
- 5 more cuts (to 3.00-3.25%) would drive top 5-yr CD to ~3.40-3.60%.
- Recession scenario (Fed funds to 2.00%) would drive top 5-yr CD to ~2.80-3.00%.
Action checklist
- Lock at least 50% of CD-allocation now at 4.55-4.65%. Historical data shows the absolute high in a cycle rarely lasts more than 6 months from the first cut.
- Choose 5-7 year over 1-3 year. Long shelf falls less in absolute terms than short shelf but locks the rate for longer.
- Don't wait for "confirmation." Every prior cycle shows: by the time the cuts are obvious, they're already in the rates.
- Consider MYGA at 5.75-5.85% — the 110-130 bps premium over CDs reflects the carrier lag, which favors today's buyer.
Related: Lock CD now or wait? | How much will CD rates drop? | CD rate forecast 2026-2027 | MYGA historical data
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Get My Rate-Lock ReviewFAQ
Do CD rates always drop after a Fed cut?
Yes — in every Fed cutting cycle since 1990 (1990, 1995, 2001, 2007, 2019), top CD shelf dropped within 30-60 days. The magnitude depends on the size and pace of cuts.
How much did CDs actually drop in the 2019-2020 cycle?
Top 5-yr CD fell from 3.10% to 0.85% over 14 months — a 73% drop in yield. The COVID emergency cuts in March 2020 accelerated what would have been a slower normal-cycle drop.
Why does the 5-year CD shelf drop less than the 1-year shelf?
The 5-year shelf already prices in expected future cuts. The 1-year shelf is closer to spot Fed funds rate. When the Fed cuts, the 1-year shelf gets the full hit; the 5-year shelf gets a partial hit.
What was the lowest CD rate during 2009-2015?
Top 5-yr CD bottomed around 1.85% in late 2010 and stayed in the 1.50-2.50% range for six years. The takeaway: when the bottom comes, it can stick around.
Are bank CDs or brokered CDs more sensitive to Fed cuts?
Brokered CDs reprice within days. Bank CDs typically reprice within 2-4 weeks. For buying purposes, brokered shelves give faster information about where the market is going.
If the Fed cuts -50 bps in July, what is the expected CD shelf by year-end?
Based on the 2019 analog: top 5-yr CD would likely move from 4.55% to ~4.15% within 30 days, then to ~3.85% by year-end as additional cuts arrived. The 1-year shelf would fall faster — from 4.75% to ~4.10% within 30 days.
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Disclosure
Fed funds rate, Treasury yields, and product rates cited in this article reflect publicly available data as of 2026-06-27. CD, MYGA, and HYSA rates change frequently — typically weekly for HYSAs, daily-to-weekly for CDs, and monthly for MYGAs. Always confirm current rates against the carrier's most recent disclosure and the actual contract before purchasing. This article is general information for educational purposes; it is not a personalized recommendation, solicitation, or offer of any specific product. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers. CDs are FDIC-insured to applicable limits; MYGAs are backed by the issuing carrier and state guaranty associations (typical coverage $250,000-$300,000 per owner per carrier); HYSAs are FDIC-insured to $250,000 per depositor per institution. MYGAs are long-term contracts with surrender charges; they are not suitable for funds you may need before the end of the surrender period. Past rate trends do not predict future rates. AM Best ratings and tax treatment are subject to change.