I-Bond Interest Rates To Near 7%

[jeffrey]

The Bureau of Labor Statistics released The Consumer Price Index (CPI) for September which rose 1.2%, the largest one-month increase in 25 years. The blame for the jump was placed on a spike in oil prices as the result of Hurricanes Katrina and Rita.

The CPI rates are used to calculate what rate the the US Government I-Bonds will pay come November 1, 2005. This new rate will replace the current I-Bond rate of 4.8%.




Currently the I-Bonds pay a fixed rate of 1.2% + the inflation rate. With the new data released, the new add on portion will be 5.69%. The fixed rate portion could also change and should fall somewhere between 1.0% and 1.8%. This would mean that the I-Bond would pay a minimum of an incredible 6.69% and as much as 7.49% depending on what is decided for the final fixed rate portion.

For more information about the I-Bond, you can go to the Treasury Department Website