The TreasuryDirect just announced the new I Bond rates today. The new inflation component is 4.84% which is about what had been predicted. The fixed rate had the largest drop it has ever had since the I Bonds started. It fell from 1.20% to 0%. The largest previous drop was in November 2001 when it fell from 3% to 2%.

The inflation component is combined with the fixed rate to give the total earnings rate. Due to high inflation we’ve been experiencing, the inflation component is a very high 4.84% so the the combined rate is a respectable 4.84%. However, with a 0% fixed rate, the earnings now will just keep pace with the government reported inflation (CPI-U).

With this new low fixed rate and the recent purchase limit reductions, these I Bonds have lost much of their appeal.