The Treasury just released the new I Bond rates this morning. The new fixed rate fell from 0.30% to 0.20%. When combined with the new inflation rate of 1.54%, the total rate is 1.74%.
As I described last month, The inflation component was already known based on the previous CPI numbers. However, the fixed rate component is determined secretly by the Treasury. In November, the fixed rate increased from 0.10% to 0.30%, I was hoping this was a sign that new appointees at the Treasury were going to be friendlier to Savings Bond investors. So much for that theory. At least it's a little better than what we got in May 2009 when the fixed rate was set to only 0.10%. That was the time that the inflation component when negative (-5.56%). I'm hoping that one of these years we'll see a return of fixed rates of at least 1%. Before 2008 the fixed rate had always been 1% or higher, and before 2001 it had always been 3% or higher.
The Treasury also announced the new rate for EE Bonds. Those issued from May 2010 through October 2010 will earn a rate of 1.40%, which is a 0.20% rise from November. Unlike I Bonds this won't fluctuate with inflation. However, if you hold the EE Bond for 20 years, you'll get double the initial value of the EE Bonds which comes out to be about 3.50% annual return for 20 years. In this recent post I looked into the question of buying EE Bonds if you've reached the yearly limit on I Bond purchases.