View all text of Subpart A [§ 359.0 - § 359.24]
§ 359.14 - How are composite rates determined?
Composite rates are set according to the following formula (See appendix A to part 359 for examples of calculations involving composite interest rates.):
Composite rate = {(Fixed rate ÷ 2) + Semiannual inflation rate + [Semiannual inflation rate × (Fixed rate ÷ 2)]} × 2. 22 Example for I bonds issued May 2002-October 2002:
Fixed rate = 2.00%
Inflation rate = 0.28%
Composite rate = [0.0200 ÷ 2 + 0.0028 + (0.0028 × 0.0200 ÷ 2)] × 2
Composite rate = [0.0100 + 0.0028 + 0.000028] × 2
Composite rate = 0.012828 × 2
Composite rate = 0.025656
Composite rate = 0.0257 (rounded)
Composite rate = 2.57% (rounded)