Don’t delay in getting FD now, after RBI policy banks will give you a shock soon

By Sudhakar Yadav February 9, 2024 10:45 AM IST
Fixed Deposit (FD) - India TV Paisa
Photo:FILE Fixed Deposit (FD)

If you are in Fixed Deposit (FD) If you are thinking of getting it done then don’t delay now. This is because right now banks are offering the highest interest on FD. However, after the policy of Reserve Bank of India (RBI), there is a possibility of reduction in it as RBI has given indications about it. RBI Governor Shaktikanta Das said that inflation is coming down. At the same time, the interim budget 2024 has cleared the way for a rapid reduction in interest rates.

This is because the government has presented a lower fiscal deficit figure of 5.1% compared to market expectations of 5.3-5.4%. Apart from this, it has been said that there should be less borrowing from the market. Inflation has also fallen below the target of the Reserve Bank. All these reasons will clear the way for Reserve Bank to cut the repo rate. A reduction in interest rates may be announced in the monetary policy of April. In such a situation, banks can start reducing interest rates on FD even before this. To avoid this, it would be beneficial to do FD as soon as possible.

Repo rate was increased by 2.5%

Due to rising global inflation, the Reserve Bank of India (RBI) had increased the repo rate by 2.5% between May 2022 and February 2023. However, inflation has since moderated and is now below 6%, which is within the RBI’s range. Consumer Price Index (CPI) based inflation increased to 5.7% in December from 5.65% in November. However, core inflation remains low at a two-year low of 3.9%. Headline inflation will remain limited to around 5-5.2% YoY in 1Q24 and average 5.4% YoY in F24 and 4.5% in F25 due to sharp decline in vegetable prices and favorable base effect. This will pave the way for reduction in repo rate.

Currently getting 8% to 9% interest on FD

At present, many government and private banks of the country are giving 8% to 9% interest on FD. Therefore, the attraction of small investors towards FD has increased. However, with the expectation of reduction in interest rates, banks will cut interest rates faster. To avoid this, the best opportunity is to lock in FD at high interest rates. Let us tell you that whenever FD rates start falling, its first impact will be on short to medium term interest rates. So, if you have funds to invest for short to medium term (up to 3 years) then you can book now.

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