RBI Repo Rate Hiked Again; Now’s the Best Time to Invest in Fixed Deposits

The Reserve Bank of India (RBI) increased the repo rate by 25 basis points in its first monetary policy meeting following the Union Budget 2023. As a result, the banks will soon begin passing on the gains to the consumers in the form of an increase in deposit rates, which will undoubtedly cheer up investors in fixed deposits.

It will be keenly examined to see how much the banks raise their FD rates after the policy rate hike in February, according to Amit Gupta, MD of SAG Infotech.

"It is true that both bank depositors and new loan borrowers will be directly impacted by a rise in bank lending rates. Following an increase in the repo rate, banks raise the interest rates on their consumer loans, and they frequently extend the loan's term rather than raising the monthly payment as a result, according to Gupta.

What is the Best Time to Invest in Fixed Deposits?

"We reaffirm that the yield curve is appealing across maturities, making now an excellent time to invest in the schemes. Depending on their risk appetite, investors may choose to invest in the liquid and low duration category at the short end of the curve and the medium to long duration category at the long end," says LIC Mutual Fund's CIO-Debt Marzban Irani.

Is the RBI Repo rate Hike Good for FD Investors?

The fact that banks would hike deposit rates is, in fact, good news for investors in fixed deposits, according to Archit Gupta, founder, and CEO of Clear.

As a result, FDs would become more appealing and serve as a source of fixed income. "The rate of deposit would also get boosted by some margin. As a result, more people would be persuaded to invest in FDs, resulting in a dearth of freely floating currency in the market. According to Gupta, this will reduce the amount that bank retail clients spend.