Average interest rates on certificates of deposits moved modestly lower for the week ending March 12, 2010.  Although the combined average rate for all bank CD terms measured in the weekly survey of bank CD rates performed by Selectcdrates.com, the rate drop this week was quite mild with two of the four maturities measured showing no change in rates.

The average rate on the top ten best six month CD rates was unchanged for the week.  The best six month CD interest rates available nationally held on to last week’s figure of 1.29%. 

The average yield for the top ten one year bank CDs moved lower by just one basis point or 1/100 of a percent on the week.  The average rate for the one year CDs dropped down to 1.66% from the previous week’s average of 1.67%.

Two year CD rates held their ground for the week.  The average rate for the top ten best two year CDs remained at 2.10%. 

The five year CD rates took the biggest hit for the week but were still relatively minor.  The average rate on the top five year CDs available nationally dipped by two basis points bringing the average yield down to 3.20% from last week’s average rate of 3.22%.

There are a number of factors affecting bank CD rates during this economic cycle that are keeping a lid on any upside movement.  One key factor is the question hanging over the market regarding what phase in the recovery cycle the U.S. economy is in. 

Economic growth normally puts pressure on bank rates but the recent economic activity seems to have very little to do with loan demand or increasing cost pressures with higher utilization rates therefor having little impact on higher bank rates.  The Fed has also continued to hold their forecast that short term rates will remain low for an extended period of time and they foresee low rates of inflation for an extended period of time as well. 

With most U.S. banks are awash in excess reserves due to low lending levels and inflation remaining in check, higher bank interest rates are not likely to emerge.

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