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US I bonds set to start at a 5.51 per cent composite rate

New US Series I savings bonds will carry a 5.51 per cent initial annualized composite rate for the November-to-April issuance period. A 1.40 per cent fixed component stays with each bond, while the inflation-linked component can change. Purchase limits and redemption restrictions remain separate conditions of the savings product.

Economics & Markets··Morning
Side-profile wide view of the US Treasury building in Washington, with its granite facade, black iron perimeter fence and United States flag.

New issuance gets a higher starting rate

The US Treasury set a 5.51 per cent initial annualized composite rate for Series I savings bonds issued from November through April 2027. The fixed component is 1.40 per cent. These terms apply to newly issued bonds, with the fixed component remaining attached for as long as they are held, up to 30 years.[1], [2]

The starting composite rate increased from 4.26 per cent. The semiannual inflation adjustment is 2.04 per cent, equivalent to an annualized variable component of 4.08 per cent.[2]

Inflation component changes over time

The two components follow different rules. The Treasury sets the fixed portion for new bonds, while the variable portion follows the Consumer Price Index. Rate resets normally occur in May and November. Bonds sold during the demand surge in 2022 began with a 9.62 per cent annualized composite rate but a zero fixed component. Their later interest payments therefore depend on subsequent inflation adjustments.[1]

Holding and purchase restrictions remain

I bonds cannot be redeemed during the first year. Redemption before five years forfeits the latest three months of interest. Annual purchases are limited to 10,000 dollars per person through TreasuryDirect. Bonds bought in different issuance periods can keep different fixed components even when the same later inflation adjustment applies.[1]

References

  1. News sourceKiplingerNew US I bonds carry a 5.51 per cent initial composite rate↩1↩2↩3
  2. News sourceTipswatchTreasury raises I-bond fixed and composite rates↩1↩2
Central banks and the rate cycleEnergy transition and climate

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