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Subject:  Feb CPI-U up slightly Date:  3/16/2006  9:34 AM
Author:  KenAtPcs Number:  15792 of 36494

The CPI-U moved up just 0.2% in February, moderating greatly from January's huge jump.

That brings the next I Bond annualized inflation adjustment (with 5 of the 6 months now available) up to -0.1% (up from -0.5% a month ago).

With only one more month's data to go, it's certainly looking as if the next inflation adjustment is going to be very, very small. (A huge jump in March matching Jan's jump would move the number up to only +1.2%.)

But I'm not in the camp that believes the Treasury is going to mark up the fixed rate to back-up-the-truck levels. I believe the TIPS rates (minus a bit of a premium for I Bond's benefits over TIPS) will be used as a ceiling, so I don't expect a new fixed rate above 2.0% is possible at this time. (Which is not to say that 2.0% fixed wouldn't be wonderful -- I'm guessing 1.6% is much more likely.)

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