Does All This Inflation Discussion Mean I Bond Rates will Jump on May 1,?

Takeaways

• I bonds are a type of U.S. Treasury Savings Bond that pays a rate that is designed to always exceed inflation.
• In order to achieve this, the I bond rate is adjusted every six-months based on inflation trends over the past half-year. I bond rates rise when inflation is high, and vice-versa.
• The next I Bond rate announcement will take place on May 1.
• Many economists predict that inflation will increase in the future due to President Donald Trump’s policy of tariffs.
• If this happens, I bond rates will rise. It may not happen as fast as you think.

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How I Bonds are Designed to Always Beat the Inflation

The U.S. Treasury Bonds I are named this way because they are designed to pay you more than inflation will take away from your purchasing power. You won’t get a big return, but at least you’ll stay ahead of inflation trends.

I bonds are able to do this because they have a variable rate of interest, which allows the Treasury Department to adjust it over time in response to inflation. I bonds are a simpler alternative to U.S. monthly inflation reporting, because they adjust their rate twice a yearly, taking into consideration the inflation trend over the last six months. Every May 1 and November 1, a new rate is announced.

Next week, the next I bond announcement will be made. There has been much discussion in the media about how President Trump’s global tariff policy could push inflation back up after it’s recently been drifting down. Does this likely upward trend in consumer prices mean a higher rate of I bond will be announced on 1 May?

Here's why the answer is both yes and no. (Spoiler: It's all in the timing.)

What's Expected for I Bond Rates on May 1—and Beyond

Two weeks ago, we reported Investopedia’s calculations for the next I bond rate—which were possible for existing I bonds when the latest Consumer Price Index (CPI) reading was released on April 10. The answer is that I bond rates will climb almost a full percentage point on May 1, and the rates different bonds will earn—based on their issue date—is shown in the table below.

These increases are not tied to any inflation that could result from the new tariffs. This is because I bond rates use inflation data for the last six month’s calculation. The CPI report for April shows the final month’s data, which is March. The tariffs were not implemented by President Trump until April 2.

Bond rates will rise on May 1, but this is only because of inflation data from October 2024 to March 2025. Tariff activity will not cause them to rise next week.

However, tariffs may trigger an increase in future I bond rates if they cause the inflation rate to tick up over the coming months. This impact would not be seen until the Nov. 1, rate announcement. The November rate is not predictable, and it’s impossible to know if the rate will be higher than the May one. Six-month inflation readings are difficult to predict.

The current situation, with its on-again-off-again tariffs is very uncertain. No one knows what the inflation trend for the entire six-month period from April to October of this year will be.

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Since each bond’s six month adjustment cycle is tied to its issue date, not everyone will be able to earn their new rate immediately on May 1. If you bought a bond in February, the rate will change again in August, and then again in February of the following year. In this case, the rate for May 1 won’t be available until August 1. For the exact starting month of each bond date, please see our article on the next I Bond rates.

How much will a newly purchased I Bond pay?

Any new I Bond purchased in May will pay a rate different from an I Bond purchased in April. That's because in addition to an inflation-adjusting component, each I bond has a permanent fixed-rate component. The Treasury doesn't share how it calculates this, so we cannot predict what it will announce as the fixed-rate component for bonds issued on or after May 1.

It is possible that the rate will drop from its current 1.20%. If you'd like to ensure you've locked in that 1.20% fixed rate (which means your I bond will always out-pay the inflation trend by 1.2 percentage points), you can still secure it by purchasing a new I bond before April 30. Note, however, that you'll need to start the transaction a couple of days ahead of that to make sure the purchase occurs in April.

Alternatives to I Bonds

Instead of—or in addition to—I bonds, you may want to put some of your savings in a top-paying CD, or even a high-yield savings account. Though they won't adjust to beat inflation like an I bond will, their rates are very competitive right now and beat the current 2.4% inflation rate. You can find the latest rankings by clicking the links below.

Daily Rankings for the Best CDs & Savings Accounts

We update this ranking every day of the week to provide you with the best rates for deposits.

• Best 3-Month Rates
• Best 6-Month CD rates
• Best 1-Year CD rates
• Best CD Rates for 18-Months
• Best 2-Year Rates on CDs
• Best 3-Year CD rates
• Best 4-year CD Rates
• Best 5-Year CD rates
• Best High-Yielding Savings accounts
• Best Money Market Accounts

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Note that the "top rates" quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is a much higher rate than the national average which includes all banks with a CD of that term. This includes many large banks who pay pittances in interest. The national averages are usually quite low. However, if you shop around, you can find rates that are 5, 10, or 15 times higher.

How we find the best CD rates and savings

Investopedia ranks the highest-paying savings and CD accounts every day. It tracks rate data from more than 200 credit unions and banks across the country. To be included in our lists, an institution must be federally backed (FDIC for credit unions, NCUA or FDIC for banks) and have a minimum deposit of $25,000 for the account. It cannot also specify a maximum amount of deposit that is below $5,000.

To qualify as a national bank, the bank must be located in at least forty states. Some credit unions may require you to donate $40 or more to a charity or association in order to join if you do not meet other eligibility requirements (e.g. you do not live in a particular area or have a specific job). Read our methodology to learn more about how we select the best rates.

Article Sources Investopedia asks writers to use primary resources to support their writing. These include whitepapers, government data, original reports, and interviews with experts in the industry. Where appropriate, we also reference original research by other reputable publishers. Our website contains more information about the standards that we use to produce accurate, unbiased content. Editorial Policy

1. U.S. Treasury. "Questions and Answers About Series I Savings Bonds," Page 1.

2. U.S. Treasury. "Questions and Answers About Series I Savings Bonds," Page 3.

3. U.S. Bureau of Labor Statistics "Consumer Price Index."