How this number is made
A Series I bond’s composite rate combines a fixed rate, set for the life of that bond, with a semiannual inflation rate announced by the Treasury. The formula is the Treasury’s: fixed plus twice the semiannual inflation, plus their product. Both inputs change. Type the ones on the current announcement.
- The fixed rate is the one for bonds bought in this window, not an older bond’s fixed rate, unless that is the bond you are pricing.
- The inflation rate is the semiannual figure in the announcement, not CPI itself.
Formula
Composite = fixed + 2 × semiannual inflation + fixed × semiannual inflation. Rates in decimal form.
Worked example
With the figures already in the form, composite rate, floored at zero is 4.22%.
Questions
Is the default the current rate?
No. Both pieces are announced and then replaced. The defaults are only a filled-in example.
Can the composite be negative?
The Treasury floors the composite at zero. This page shows the formula result and then the floored rate.