Inflation Index Bonds Now Paying 0%

May 2nd, 2008

Via: Big Picture:

Have you noticed what the interest rate TIPs now pay?

How about Zero?

Thanks to a flight to safety, the fixed rate on the newest issue of Series I inflation-indexed savings bonds has for the first time fallen to zero.

Heres’ the Treasury Department press release:

I Bond Earnings Rate 4.84%, Fixed Rate 0.00%

The earnings rate for Series I Savings Bonds is a combination of a fixed rate, which applies for the life of the bond, and the semiannual inflation rate. The 4.84% earnings rate for I bonds bought from May through October 2008 will apply for their first six months after issue. The earnings rate combines a 0.00% fixed rate of return with the 4.84% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U).

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