In March 2012 the CPI-U was 229.392.
In September 2012 the CPI-U was 231.407.
That's a 0.878% increase over the six month period. Inflation has been fairly tame.
Fixed rate = 0.00%
Semiannual inflation rate = 0.878%
Composite rate = [Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)]
Composite rate = [0.0000 + (2 x 0.00878) + (0.0000 x 0.00878)]
Composite rate = [0.0000 + 0.01756 + 0.0000000]
Composite rate = 1.76%
As seen in the following chart, predicting the 0.0% fixed rate just keeps getting easier and easier.
Click to enlarge.
The government would definitely set the rate below zero if it thought it could do so (without waking more than a few out of their blissful illusion of prosperity slumber). It's not that easy though. "The fixed rate will always be greater than or equal to 0.00%." That's what the government has said. Since lowering the rate isn't too likely, the powers that be simply reduced how many I-Bonds we can buy. You know, to refocus the program on small investors.
December 7, 2007
Annual Purchase Limit For Savings Bonds Set at $5,000
The reduction from the $30,000 annual limit in effect for both series since 2003 was made to refocus the savings bond program on its original purpose of making these non-marketable Treasury securities available to individuals with relatively small sums to invest.
Funny how that was the very month the great recession began. One might even say hilarious, lol. Sigh.
I Savings Bonds Rates & Terms
St. Louis Fed: CPI