RBI policy gives Fixed Deposit investors more time to lock in funds at higher interest rates
The Reserve Bank of India (RBI) today kept the Repo Rate unchanged at 6.5%. Many experts believe that this decision is good for home loan borrowers and will further boost home sales during the festival season.
The unchanged repo rate has also provided fixed deposit investors an extended window to make the most of currently higher interest rates. Several banks are providing up to 9% or more annual interest on FDs of various tenors.
According to Anshul Gupta, Co-Founder and Chief Investment Officer at Wint Wealth, retail investors should lock long-term FDs at higher interest rates over the next 3-6 months.
“From retail investors’ standpoint, we are almost at the peak of the interest rate hike cycle. Thus, over the next 3-6 months, retail investors should lock their funds in long-term fixed deposits at higher interest rates,” said Gupta.
However, investors should stagger their investments into small FDs across different banks.
“Depending on the goal and timeframe of their investment, they can stagger this investment into a few smaller FDs across different commercial and small finance banks, as well as NBFCs,” said Gupta.
“On the other hand, bond markets have already been discounting rate cuts, and 10-year G-Sec yields are down by 30 bps from this year’s peak levels. Home loan borrowers would do well to stick to their floating interest rate loans for now, even if fixed-rate loans are available at some discount,” he added.
Also Read: RBI keeps repo rate unchanged at 6.5% – What it means for homebuyers?
“On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today (October 6, 2023) decided to: Keep the policy repo rate under the liquidity
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