Following the RBI meeting, the biggest discussion is about the new inflation forecast. The forecast of a continued decline in the Consumer Price Index (CPI) may keep prices of everyday items under control in the coming months. Meanwhile, due to the continued reduction in the repo rate, investors in fixed deposits (FDs) are worried about the possibility of falling interest rates. Find out how this bipolar policy will impact your financial situation.
Will commodities really become cheaper
The RBI’s Monetary Policy Committee (MPC) states that inflationary pressures in the country are now rapidly easing. Recent reductions in GST rates, improved food supply, and improved production are contributing to this positive decline.
The RBI has reduced the CPI inflation forecast for fiscal year 2026 (FY26) from 2.6% to 2%. This is a major relief. Governor Sanjay Malhotra confirmed that inflationary pressures have eased due to improved food supplies, GST rate cuts, and softening international commodity prices. This clearly indicates that everyday items are now poised to become more affordable.
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Repo Rate Cut
The MPC has cut the repo rate by 25 basis points to 5.25%. This is the fourth cut this year, bringing the total reduction to 125 bps. The repo rate, which was at 6.5% at the beginning of the year, now stands at 5.25%. This unprecedented cut will have a direct impact on home loans, car loans, and business loans. This means your EMIs (monthly installments) will be reduced, making borrowing cheaper. This is a major financial relief for millions of borrowers.
Economy Gains Strong Momentum
The RBI has also raised its GDP growth forecast for fiscal year 2026 from 6.8% to 7.3%. This data indicates that the country’s economy is picking up pace faster than expected. This guarantee of strong economic growth is a positive sign for investors and industries.
Will FD interest rates fall further
After the fourth consecutive repo rate cut, the biggest concern for fixed deposit (FD) investors is whether FD rates will fall further. Banks and small finance banks (SFBs) had already reduced FD interest rates. Experts believe that FD rates may fall further in the coming months. While existing FD investors will not be affected, new investors will receive lower interest rates, which could reduce their maturity amounts. The impact of the repo rate cut may not be immediately visible on FD rates, but most banks may revise their offers in the coming months.