The Federal Reserve Open Market Committee meets tomorrow and it's almost certain that they'll vote to keep rates at 2%. The Fed Funds Rate Predictor puts the probability at almost 90%.

But after that, markets seem to expect rates to rise. Bloomberg reports that:

"There are widespread expectations among traders for a rate rise in the next three months: There are 36 percent odds of a boost in August and 93 percent in September, according to futures contracts on the Chicago Board of Trade. Economists in a monthly Bloomberg survey through June 11 projected the Fed will keep the rate at 2 percent this year, according to the median estimate."

Bernanke may be one of the reasons.

"Federal Reserve Chairman Ben S. Bernanke, by voicing concern about inflation and the slumping dollar, has fanned investor expectations for an interest-rate increase as soon as August. He may regret it"

Faced with a weak economy, Bernanke may have to choose between two uncertain options. William Poole, the former governor of the St. Louis Fed had this to say on Bloomberg TV:

``The issue here is whether the Fed is willing to risk an escalation of inflation and then a bigger recession later, or acts earlier, taking a risk of a smaller recession, but preventing inflation from getting out of hand"

If banks are any indication than they are also anticipating a rate increase. BestCashCow has received a steady stream of rate increases on CDs over the last several weeks and rates on 1 year CDs are now at or above 4% APY and the rate on 3 year CDs are now at 5% APY.

M&T Bank, NA (not to be confused with their parent bank M&T Bank Corporation) began offering very competitive rates on two and three year CDs. Both their 2 year CD at 4.34% APY and their 3 year CD at 4.69% APY are second in yield on the BestCashCow CD Rate Tables.

There is a five thousands dollar minimum to open the CD but no need to open a companion savings account or some other account. As the woman on the phone told me, "all we sell are CDs, IRAs and Money Markets."

The application process is a bit substandard. You need to print out the form and then mail it in with a check. This is sort of pre-1997. The postal stamp provides proof of when the check was mailed and you'll get the rate as of that day.

M&T Bank, NA is a subsidiary of M&T Bank Corporation which has over $65 billion in assets as of December 31, 2007 and is one of the 20 largest commercial bank holding companies headquartered in the U.S.

Everbank has come out with aggressive pricing and now leads yields on the BestCashCow rate table for 12 month CDs and 36 month CDs . The Yield Pledge CDs are FDIC insured up to $100,000 per person.

To see how these rates compare to other banks, please visit the 12 month CD Rate Table and the 36 Month CD Rate Table.

You can also read about what others think of EverBank on the BestCashCow EverBank page.