The federal government Monday announced interest rates for Canada Savings Bond Series 120 and Canada Premium Bond Series 70, which will be on sale Oct. 5, 2009 until Nov. 1, 2009.

The CSB Series 120 will pay an annual interest rate of 0.4%, the Department of Finance said.

The CSB interest rate, posted for a one-year period, is guaranteed and may be increased during this period if market conditions warrant. CSBs can be cashed at any time.

The Canada Premium Bond, which can only be redeemed once a year on the anniversary of its issuance, will pay 1 %.

The CPB interest rates, posted for years one through three, are guaranteed and may be increased up until the issue date if market conditions warrant. Once the issue date has passed, no changes to the posted interest rates will be made. The CPB is redeemable once a year on the anniversary of the issue date and during the 30 days thereafter.

The new interest rates also apply to bond series dating back to 1991.