The US Treasury Department announced a new interest rate for Series I savings bonds from May 1 to October 31, 2025, at 3.98%. This rate replaces the previous rate of 3.11% over the last six-month period. It incorporates an inflation-based portion of 2.86% and a fixed rate of 1.10%, both of which represent a decrease from October’s fixed rate of 1.20%. The Treasury uses this composite rate to determine the bondholder’s earnings over six months. This dynamic structure combines a variable component that reacts directly to inflation and remains constant for six months, regardless of when the next update happens, with a fixed part. This fixed part stays locked in as long as the bond is held. The exact method of calculating this composite rate isn’t disclosed by the Treasury, causing confusion among investors. Despite a decline from record-high rates seen in May 2022, the new rate offers a decent fixed component for those who plan to hold these bonds for an extended period. This reduction reflects a shift towards more conventional interest rate dynamics.