RBI Cuts Repo Rate: Impact on Fixed Deposits

The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points to 6.25%, the first cut in five years. This move will likely lead to lower fixed deposit (FD) rates, giving investors a last chance to secure higher returns before banks adjust their interest rates.

When the RBI lowers the repo rate, banks can borrow money at a cheaper cost, prompting them to reduce loan interest rates. However, this also leads to a decline in deposit rates, as banks no longer need to offer high returns to attract deposits. Financial experts believe the RBI's decision is aimed at supporting economic growth and could signal further rate cuts.

For FD investors, especially senior citizens relying on interest income, falling rates mean lower returns. Experts predict another rate cut of 25 basis points in upcoming meetings. Investors may need to explore alternative investment options to maintain their earnings.