FD interest rates of 8-9% to continue for a longer period as RBI holds repo rate; how to invest in fixed d

After raising interest rate by a cumulative 250 basis points in 11 months, the Reserve Bank of India (RBI) on Thursday unexpectedly kept the benchmark rate unchanged. Let us understand why RBI made a surprise pitstop in the rate hike cycle.

As the RBI unveils its latest monetary policy stance, a new research paper questions the suitability of India’s inflation-targeting regime. Thanks to the uniqueness of India’s labour market, RBI’s decision to sharply raise interest rates over the past 12 months might have, far from containing inflation, been counterproductive for the common man

Interest rates not going up is good for market-related investments.

The repo rate hike cycle has finally paused, however unless inflation is tamed the likelihood of another rate hike in near future can not be ruled out. FD investors are much better placed now than a year before however the FD rate hikes have largely been limited to small to medium term tenure. As the full transmission may take some time this may be the right time to rejig your FD investments.

RBI keeps repo rate unchanged in the second consecutive monetary policy this year which signals that the interest rates have reached almost the peak of current cycle. The possibility of a rate cut in coming months is becoming stronger. While short to medium rates have risen early the long term FD rates are yet to get full benefit of repo rate hikes. So what should you do with your FDs now?

New Delhi [India], February 5 (ANI): The Monetary Policy Committee of the Reserve Bank of India (RBI) in its February review meeting is expected to again put a pause on the repo rate, according to SBI Research. In its December meeting, the RBI unanimously decided to keep the policy repo rate unchanged at 6.5 per […]

The RBI may not increase the repo rate as it ascertains the durability of high food prices while seeing the impact of previous rate hikes work their way through the economy, which faces threats from a weak external environment. The central bank can, however, bolster transmission of its policy actions and prevent borrowing costs from turning cheaper by keeping a tight leash on banking system liquidity.

Fixed deposit interest rate hike: The era of rising interest rates on fixed deposits is not over yet. Some factors that indicate this is credit growth remaining much higher than deposit growth; the recent decision of the Reserve Bank of India (RBI) to increase the investment limit of non-callable deposits to Rs 1 crore. As an FD investor, you can take advantage of rising interest rates to invest in term deposits. Know how your FD interest rate will be impacted in the short term and long term.

Fixed deposit investors witnessed a good hike in FD rates since May 2022 after a long gap during which they had witnessed one of the lowest rates in decades. However, with 3 consecutive pause in repo rate hikes by RBI there was a fear of reduction in rates which could have led to fall in FD interest rates has well. However, FD investors are likely to enjoy higher FD rates for a longer period as RBI decided to keep the repo rate unchanged.

So far, the RBI has raised repo rate six times including an off-cycle increase of 40 basis points in May last year. The decision of the six-member panel will be announced by RBI Governor Shaktikanta Das on April 6.