The I bond fixed rate of 1.40% is its highest since 2006, after a decade near zero

The fixed rate on I bonds issued from November 1, 2026 is 1.40%, which matches the level set on November 1, 2006 and is higher than every fixed rate TreasuryDirect set in the 20 years between, according to the Treasury's rate tables. A bond's fixed rate never changes, so the figure fixes part of a bond's return for as long as it is held.

FinanceInTime reported the new combined rate of 5.51% when it was announced. This analysis looks at the other half of the story: where the fixed part sits in the program's history, and why it separates bonds that look alike.

Sixteen of 58 settings were zero

TreasuryDirect has set a fixed rate 58 times since September 1, 1998, when it was 3.40%. The highest setting was 3.60% on May 1, 2000. Sixteen of the 58 settings were 0.00% (computed from the table). Six of them came in a row, from November 1, 2010 to May 1, 2013, and five more in a row from May 1, 2020 to May 1, 2022.

From November 2009 through November 2022, every one of the 27 settings was 0.50% or lower (computed). That stretch ended with 0.90% on May 1, 2023 and 1.30% on November 1, 2023. Since then the settings have been 1.30%, 1.20%, 1.10%, 0.90% and 0.90% before the new 1.40%.

The tables do not say why the Treasury chose each number, so this analysis does not attribute the pattern to a cause. The data show only that the fixed part was close to zero for most of the 2010s and the early 2020s.

How the two parts combine

The Treasury describes an I bond's interest as a combination of a fixed rate and an inflation rate. The fixed rate is set each May 1 and November 1, applies for the life of the bond to all bonds issued in the next six months, and never changes. The inflation rate, which is based on changes in the non-seasonally adjusted consumer price index for all urban consumers, applies for six months to all I bonds ever issued.

The formula is the fixed rate, plus two times the six-month inflation rate, plus the product of the two. For bonds issued from November 2026, with a fixed rate of 1.40% and an inflation rate of 2.04%, it gives 5.51% after rounding.

One inflation rate, four different bonds

Because the inflation part is the same for every bond, the fixed part explains the differences between them. TreasuryDirect's table of current composite rates shows what bonds bought in different periods earn for the six months starting in November 2026:

Bought	Fixed rate at purchase	Composite rate now
November 2026 to April 2027	1.40%	5.51%
May 2026 to October 2026	0.90%	5.00%
November 2022 to April 2023	0.40%	4.49%
May 2020 to October 2020	0.00%	4.08%

Source: TreasuryDirect, composite rates and fixed rates tables. The fixed rate column is joined from the fixed rate table by the date each rate applied.

A bond bought from May to October 2020 therefore earns 1.43 percentage points less than one bought this month (computed), although both receive the same 2.04% inflation rate. The Treasury's table also shows that bonds bought from November 2006 to April 2007 earn the same 5.51% as the newest ones, since they carry the same 1.40% fixed rate.

The inflation part moves much more

The six-month inflation rate has ranged from minus 2.78% on May 1, 2009 to 4.81% on May 1, 2022, a spread of 7.59 percentage points (computed). The new setting of 2.04% compares with 1.67% on May 1, 2026 and 1.56% on November 1, 2025.

The Treasury says that deflation can pull the combined rate below the fixed rate, but that it will not let the combined rate go below zero. A positive fixed rate therefore cushions a period of falling prices, while the inflation part can lift the combined rate or reduce it.

The rules that shape what a fixed rate is worth

TreasuryDirect says an I bond earns interest for 30 years unless it is cashed earlier. A bond can be cashed after 12 months, but cashing it in less than five years costs the last three months of interest. Since January 1, 2025, I bonds have been available only electronically.

Those terms matter for how the fixed rate is read. The fixed part is attractive only as long as the bond is kept, and the three-month penalty applies in the first five years.

The fixed rate is the part to weigh, and the exit terms are the catch

Our reading is that the 1.40% matters more to a household than the 5.51% beside it. The combined rate will be reset in May, and the data above show the inflation part has swung by 7.59 percentage points. The fixed part is the piece that does not move, and it is now the highest in two decades, after a stretch when it often sat at zero.

The opportunity is a return that is tied to consumer prices with a known fixed part on top. The threat is that the product is built for patience: the three-month penalty before five years and the electronic-only purchase route limit who can use it comfortably. We would weigh the fixed rate against what a household expects to need within five years rather than against the combined rate.

We expect, as a forecast, that the combined rate will follow inflation when it resets on May 1, 2027 if consumer prices keep rising at the pace behind the 2.04% figure; we do not forecast the rate itself. Our view would change if the Treasury changed the formula or the redemption rules.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.