Last chance to get higher interest on FD: RBI keeps interest rates steady
The Reserve Bank of India’s (RBI) rate-setting Monetary Policy Committee has kept interest rates steady for the second consecutive policy. The RBI had increased interest rates from 4% to 6.5% in February 2022. With the bank keeping interest rates stable again, experts believe that interest rates are at their peak, and there is a possibility of a decline towards the end of this year and the beginning of the coming year. This means that if you invest in Fixed Deposits (FDs) in the coming year, it is likely that you will get a lower rate of interest as the RBI would have started cutting rates.
Some banks have already started marginally cutting lending rates and deposit rates. ICICI Bank has reduced the one-month MCLR from 8.50% to 8.35% and the three-month MCLR from 8.55% to 8.40%. The bank has also increased the MCLR by 5 bps to 8.75% for six months tenure and 5 bps to 8.85% for one year tenure. Axis Bank and Punjab National Bank have also cut the interest rates on some of their FDs. This indicates that the interest rates on FDs may have peaked and can only go down from here.
Therefore, knowledgeable investors are advised to invest in FDs for a period of 3 to 5 years to protect themselves from the fall in interest rates. As interest rates fall, so does your money, which would have already been locked in at higher rates.
In conclusion, the RBI’s decision to keep interest rates steady for the second consecutive policy indicates a possible decline in interest rates towards the end of this year and the beginning of the coming year. This means that investors should invest in FDs for a period of 3 to 5 years to protect themselves from the fall in interest rates.
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