New I bond fixed rate 0.10%; EE 0.70%
Friday, May 1st, 2009
Categorized as: Yesterday's News (old post archive)
The inflation component for I bonds for the next six-month rate period is -5.56%, which will wipe out the fixed base-rate on all issues of I bonds, including newly issued I bonds.
New I bonds will sport a fixed rate 0.10%, the second-lowest ever. All I bonds, including new ones, will have an interest rate of 0% during their next six-month rate period, which begins today for bonds issued in May and November and in later months for bonds issued in other months.
The fixed rate is good for the life of the bond; the inflation component is adjusted every six months based on changes in the Consumer Price Index.
The spread between the I bond fixed base rate and the 10-year TIPS will be 159 percentage points, the second largest spread since I bonds were introduced. The 10-year TIPS rate on Friday was 1.69%.
The 0.70% rate on new EE bonds shows the Treasury is still fine with taking advantage of EE bond investors. It’s the lowest EE rate ever offered, and is less than half the 1.64% EE bonds issued under different rules from May 1997 to April 2005 will be earning during their next six-month rate period.