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Rate On Series I Bonds Plunges to 1.74%

Posted in CD Rates, Investing by CrankySaver
May 15, 2010 09:38 AM - 5 Comments

We couldn’t help but notice when the return on Series I Savings Bonds soared to 3.36% last fall.

These government bonds, with an interest rate that resets every six months to reflect inflation, were suddenly paying more than most CDs.

Series I Savings BondsBack then, conservative politicians and economists were warning that all of the reckless spending in Washington would result in a long and painful bout of inflation.

That seemed plausible enough for us to suggest that rates on Series I Bonds would remain high for the foreseeable future because “it’s hard to imagine the Consumer Price Index will decline anytime soon.”

But those dire predictions haven’t turned out to be true — at least not yet.

The semiannual inflation rate used to calculate Series I Bond returns fell to 0.77% over the most recent six months, down from 1.53% the previous six months.

When the Treasury bonds reset May 1, the rate plunged back to 1.74%, where it will stay until the next adjustment on Nov. 1.

If you still want in, the easiest way to buy savings bonds is at TreasuryDirect.

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Comments (5)
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5 Existing Comments

  1. Jessica M. said:
    on May 15th at 12:30 pm

    Well there’s a shock. The right wing crazies weren’t right about inflation. The fear mongers were either politicians trying to do everything possible to destroy Obama or gold salesmen trying to stampede all of us into precious metals.

  2. MT said:
    on May 15th at 07:05 pm

    Who really believes that the government is publishing an accurate measure of inflation? Just because the gov says inflation is low, doesn’t mean it’s actually low. It’s in their best interest to force inflation numbers lower so they can keep the printing presses running while keeping COLAs et al in check. There’s never any inflation in Washington D.C. But back in Realityville, the prices of goods and services are going up.

  3. madmark said:
    on May 16th at 02:44 pm

    So, the CPI is just another part of the giant conspiracy to print money without acknowleding the true rate of inflation? And what, the government wasn’t as good at decoupling the CPI from reality back in the late ’70s and early 80s when it was going up 12% or even 18% a year?

  4. CrankySaver said:
    on May 17th at 08:51 am

    Just to clarify. We didn’t really believe the worst of the doomsayers predicting double-digit hyperinflation. But with a recovering economy and record government borrowing, a modest inflation rate of 3 or 3.5 percent didn’t seem farfetched.

  5. leantoright said:
    on May 19th at 02:48 pm

    Oh great, the CPI fell in April. The Federal Reserve has absolutely no incentive to raise interest rates. We need to get rid of Ben and his gang of financial terrorists before they bankrupt every responsible American left. Go Rand Paul!

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