Is this the last chance to lock your money in fixed deposits? Here are 4 key reasons
As anticipated, Reserve Bank of India’s (RBI) Governor Shaktikanta Das on Friday announced to keep the repo rate constant at 6.5 percent for seventh consecutive time as he shared the outcome of first monetary policy committee (MPC) meeting in fiscal 2024-25.
This is believed to be either the last or perhaps second last meeting before the interest rates are eventually slashed after a long hiatus. A Reuters poll predicted that the RBI is expected to cut rates in the Sept quarter. Notably, the banking regulator had raised the repo rates by a cumulative of 250 basis points before keeping them unchanged since Feb 2023.
So, the current time may be the most opportune time to lock fixed deposits (FDs) for a long time.
Inflation under control: Inflation continues to be under control. RBI maintains the policy stance at 'withdrawal of accommodation'.
The RBI governor said, “When CPI inflation had peaked at 7.8 per cent in April 2022, the elephant in the room was inflation. The elephant has now gone out for a walk and appears to be returning to the forest," said Das.
In view of this, the chances of raising the interest rates further are very slim, and going forward, the rates will only come down after having stayed the same since Feb 2023.
Right move to lock the deposits at higher rates: When you lock your fixed deposits at higher rates, then even when the interest rates fall during the tenure, you continue to earn a higher rate of interest.
For instance, when you lock a three-year FD at 7 percent per annum with HDFC Bank, you stand to earn interest at this higher rate even when the rates decline to 6 percent, say, one year later.
As a result, you will continue to earn an extra 1 percent on your fixed deposit during the last
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