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Originally Posted by Russell
Yeah, I too am disappointed 
So what happens if next year they decide to lower the inflation rate to 3% ? Will it be paying 4%...that would be worse than ED/ING because most likely the interest rates will rise in general and ED/ING will be paying more than the current 4%. Lets hope they adjust the base interest rate higher when they do lower the inflation rate...
I guess I'll move my unused money into I-Bonds anyway...  |
Yup, next May the combined I Bond rate may be 4% or lower if the fixed rate stays at 1%. Back in May 2002, the inflation rate happened to be only 0.56% and the Treasury kept the fixed rate at 2.00% resulting in a combined rate of only 2.58%.
Next May could be a big disappointment for those who buy I Bonds in the next 6 months. It may be better to wait for May before purchasing more I Bonds. There could be a big hike in the fixed rate then. Back in 2001, the fixed rate had a big downward move of 1% (from 3% to 2%). So it's possible that we could see a similar move in the opposite direction.