The Reserve Bank of India (RBI) has decided not to make any changes to the buyback rate at the Monetary Policy Review (MPC) meeting. For the third time in a row, the RBI MPC held interest rates stable at the meeting. Economists expected the same amid rising inflation. Experts say that RBI has made the decision as expected. The monetary policy review has led to economic growth rather than inflation. This also indicates that the main factor in increasing inflation is the supply side. The RBI’s liberal attitude towards liquidity will ensure there is no shortage of money in the current recovery.
After a three-day meeting on Friday, RBI Governor Shaktikanta Das said: “The RBI has kept interest rates stable for the third time in a row. There are no changes in the interest rate of the reference loans. It stands at a rate of 4 percent.
How will investors benefit from FD?
Following this RBI decision, now the repurchase rate and the reverse repurchase rate remain at a rate of 4 percent and 3.35 percent, respectively. No change in policy interest rates is good news for those who save through Fixed Deposit. Banks will not make any further decisions to lower the FD interest rate. State Bank of India has not made any changes to FD rates since September 2020. Currently, this bank is paying interest ranging from 2.9% to 5.4% on FD.
What will be the effect on those who deposit money in the bank?
Banks also cut FD rates in the next few days after the RBI cuts policy interest rates. However, this reduction in the deposit rate is not proportional to the buyback rate. As a money depositor in the bank, lower interest rates mean that less interest will be received on new deposits to the account. Less interest means that the depositor’s deposit will also earn less. Increasing the interest rate means there will be more return on the deposit.
EMI is not expected to decrease
Shaktikanta Das said the central bank is committed to protecting the interests of depositors in the financial system. Now, no change in the buyback rate means that the EMI of the loan is not going to decrease at this time. Let us tell you that since March of this year, the central bank has cut policy rates by 115 basis points. The latest RBI made a change to official interest rates on May 22.
(Source: hindi.news18.com)
