I bond rate jumps to 5.51% with highest fixed rate since 2006

Savers just got a better inflation hedge from Washington. The new I bond rate is 5.51% for Series I savings bonds issued from November 1 through April 30, 2027, the Treasury said on Friday, up from 4.26% for purchases made through October 31.

What happened

Each rate has two parts. The variable piece, reset each May and November from six months of consumer-price changes, is 4.08% annualized for this window, CNBC reported. The fixed piece, which stays with a bond for its entire life, rose to 1.40% from 0.90% in April, the highest fixed rate since 2006. Combined under Treasury's formula and rounded, the composite is 5.51%.

The jump tracks hotter inflation. The consumer price index rose 3.7% in the year to September, up from 3.4% in August, as the Iran war lifted gasoline and energy costs and tariffs, AI data-center demand and travel added pressure. A New York Fed survey put one-year inflation expectations at 3.9% in September, the highest in more than three years.

Why it matters

The fixed rate is the part long-term buyers care about, because it never resets. At 1.40%, a bond bought now guarantees a real return above inflation for up to 30 years, something that was close to zero for much of the last decade. David Enna of Tipswatch.com told CNBC the bonds now look far more appealing.

There are trade-offs. Bonds cannot be cashed for at least a year, and the Treasury does not publish how it sets the fixed rate; Ken Tumin of DepositQuest.com said it may follow real yields on five-year TIPS. Existing holders keep their original fixed rate, while the variable portion moves to the new figure six months after their purchase date.

The record rate came in May 2022, at 9.62%, when inflation peaked. The current rise reflects a renewed energy-driven price surge, a theme from our Bessent energy shock and UK inflation coverage.

The timing of the announcement also matters for anyone comparing savings options. CNBC noted that many short-term investors redeemed their bonds after rates fell from the 2022 peak, and experts expect some of them to return now that inflation is pushing yields back up. Bonds redeemed within five years also forfeit the last three months of interest, a cost that makes the product better suited to money that can stay put.

What's next

The next reset comes in May, based on inflation data through March. Official tables are on TreasuryDirect's I bond rates page.

If price pressures cool, the variable part would fall, but the 1.40% fixed component locked by buyers in this window would not. That makes this I bond rate cycle more interesting for patient savers than for short-term rate chasers.

Nothing here is advice; the figures simply show how Treasury's inflation-linked product now compares with recent history.