US I Bonds Composite Rate Rises to 5.51% as Fixed Rate Hits 1.40%, Highest Since 2006

The U.S. Treasury said Friday that the composite annual rate on new Series I savings bonds will rise to 5.51% from 4.26%, applicable to bonds purchased between November 1 and April 30. The fixed rate increased to 1.40%, its highest level since 2006, renewing investor interest in the inflation-protected instrument. The new rate combines a 4.08% inflation-linked variable portion and the 1.40% fixed portion, calculated by formula and rounded. It applies only to the first six months after purchase and does not represent a 5.51% return over a half-year holding period. I bond rates peaked at a record 9.62% in May 2022 before declining as inflation cooled, prompting many short-term holders to redeem. David Enna, founder of Tipswatch.com, said the bonds' appeal has increased markedly. The September CPI rose 3.7% year over year, above August's 3.4%, while a New York Fed survey showed one-year inflation expectations at 3.9%, a more than three-year high. The Treasury adjusts I bond rates each May and November. Bonds must be held at least one year, and redemptions before five years forfeit the last three months of interest.