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RBI Repo Rate Hike: FD Rates to Get More Attractive

The Reserve Bank of India or RBI is likely to raise the repo rates or key lending rates for all the banks by an adequate 25 basis points to 6.50 per cent after February 1 Union Budget 2023 during its first meeting, as per a Reuters poll of economists.

RBI Repo Rate Hike

Stats of Reuters Poll for RBI Repo Rate Hike

More than half of the economists from 40 out of 52 are expecting a repo rate hike of 25 bps to 6.50 per cent. However, the remaining 12 are suggesting no change at the February 8 meeting.

“They (the RBI) need to pause at some point to see what exactly is the impact of the previous monetary tightening overall on growth and inflation. That is why I believe it is not premature for them to pause after 6.50%,” said Upasna Bharadwaj, Chief Economist, Kotak Mahindra Bank, as reported by Reuters.

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“With the December rate hike, the policy repo rate has climbed to a whopping 225 bps so far in FY23. At present, the repo rate is at 6.25%. For FY23, RBI’s first rate hike was 40 bps in May, followed by three consecutive rate hikes to the tune of 50 bps each between June to October, and then some softening to 35 bps in December policy. Another rate hike by the RBI will make fixed deposits attractive. The central bank is expected to raise the repo rate in February. So, depositors will have another reason to cheer because when RBI hikes the policy repo rate, both fixed deposits and lending rates are likely to go up as well. Banks have been hiking their FD rates aggressively in line with RBI’s policy outcomes since May, making this investment option already attractive,” mentioned livemint.

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Rishabh Sharma

Rishabh is an experienced content writer and editor, he is working for Viralbake to cover a diversified range of categories. His articles mainly focus on providing information, being a travel guide, educating others, and also making people aware of technology, after all, he is a technophile. When not writing he can be found gaming, watching movies, and travelling.

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