The Reserve Bank of India (RBI) announced a 40-basis point cut in the repo rate and reverse repo rate. After the rate cut, the repo rate stands at 4% and the reverse repo rate at 3.35%. This is the third time the RBI Governor Shaktikanta Das has briefed the media, on measures to boost the economy.
Fixed deposits have been a top pick with investors for decades, and for good reason too. Their high degree of safety and promise of returns makes them an option you can truly count on. But it is important to know that while FD interest rates are not linked to the market, they are sensitive to fluctuations in the repo rate. For instance, in 2018 the RBI revised the repo rate thrice, and hiked it twice to bring it to the current 6.5%. The RBI does so primarily to curb inflation, in order to maintain liquidity in the economy.
Fixed deposits in todayâ€™s day and age has become the most preferred investment option. Being a safe investment avenue, fixed deposit (FD) also have a higher rate of interest compared to a savings account. Although savings is a traditional method to park your hard earned money, it still does not prove to be that beneficial. Rather, the returns earned on a savings account are too less compared to fixed deposits as well as are gained late. This is why you should park your funds in a fixed deposit.