Interest rates reset on savings bonds

The Treasury announced new interest rates on savings bonds: 4.84% on I-bonds and a puny 1.4% on newly-issued EE bonds. The EE bond rate applies for the next 20 years, which means it's basically a message from the Treasury not to bother buying EE bonds any more. EE bonds issued more than three years ago have rates that adjust every six months. The rate for bonds sold between May 1997 and April 2005 will be 2.74% for the next six months.

I bonds aren't quite the great deal they appear to be on the surface. I bonds carry a combination of a fixed rate that applies for the life of the bond and an adjustable rate tied to the rate of inflation. Well, the fixed rate on new bonds is zero, for the first time ever. That means earning any return depends solely on inflation. The fixed rate most recently was 1.2% and has been as high as 3.6%.