Next I Bond inflation component 3.06%
Thursday, October 15th, 2009
Categorized as: Yesterday's News (old post archive)
The next I bond inflation component will be 3.06%, up from the current -5.56%. The component is based on the difference between the Consumer Price Index in March (212.709) and September (215.969). The September CPI was released this morning.
To determine what your own I bonds will earn during their next six-month rate period, see the following table.
New Series I Savings Bond composite rates
|Issue Date||Fixed Rate||Composite Rate|
|Sep 98 - Oct 98||3.40%||6.51%|
|Nov 98 - Apr 99||3.30%||6.41%|
|May 99 - Oct 99||3.30%||6.41%|
|Nov 99 - Apr 00||3.40%||6.51%|
|May 00 - Oct 00||3.60%||6.72%|
|Nov 00 - Apr 01||3.40%||6.51%|
|May 01 - Oct 01||3.00%||6.11%|
|Nov 01 - Apr 02||2.00%||5.09%|
|May 02 - Oct 02||2.00%||5.09%|
|Nov 02 - Apr 03||1.60%||4.68%|
|May 03 - Oct 03||1.10%||4.18%|
|Nov 03 - Apr 04||1.10%||4.18%|
|May 04 - Oct 04||1.00%||4.08%|
|Nov 04 - Apr 05||1.00%||4.08%|
|May 05 - Oct 05||1.20%||4.28%|
|Nov 05 - Apr 06||1.00%||4.08%|
|May 06 - Oct 06||1.40%||4.48%|
|Nov 06 - Apr 07||1.40%||4.48%|
|May 07 - Oct 07||1.30%||4.38%|
|Nov 07 - Apr 08||1.20%||4.28%|
|May 08 - Oct 08||0.00%||3.06%|
|Nov 08 - Apr 09||0.70%||3.77%|
|May 09 - Oct 09||0.10%||3.16%|
Moreover, keep in mind that the new interest rate for your I bonds will not necessarily begin on November 1. Instead, new rate periods begin every six months starting with the month in which your I bond was issued. So, for example, an I bond issued in July begins new rate periods in July and January.
Because the Treasury doesn't have public criteria for setting the fixed base-rate for new I bonds, it's impossible to predict what the next I bond fixed-base rate will be. Yesterday, the 10-year TIPS rate was 1.51%. The last time 10-year TIPS rates were at this level, the fixed rate for new I bonds was set at 0.0%. It's possible that the Treasury will make the fixed rate a bit more attractive because these are the first I bonds that will be available for purchase with tax refunds.
Given that the current fixed base rate is 0.1%, it's probably better to wait until after November 1 to buy new I bonds. I bonds you purchase today will earn nothing for six months, followed by six months of 3.17%. If you wait until November 1 to invest, you'll get 3.07%, or perhaps a bit more if the fixed rate is set above zero, for six months, followed by six months of an inflation rate yet to be determined.