For borrowers, this is good news, especially for those whose loans are linked to external benchmarks like the repo rate. However, for fixed deposit (FD) investors, the latest rate cut is likely to further reduce the interest rates on deposits and pinch their pockets.
The RBI, today, cut the repo rate by 40 basis points (bps) (100 basis points/bps = 1 per cent). The repo rate now stands at 4 per cent and reserve repo rate at 3.35 per cent. The apex bank last cut rates in its March 2020 in an advanced monetary policy review. In total, they have cut the repo rate by 115 bps since the lockdown started.
Here is a look at how today’s rate cut will impact FD investors and borrowers, both existing and new.
Interest income from FDs likely to fall further
The latest rate cut is…
