Recent headlines suggest slowing inflation and there is plenty to discuss about a likely Reserve Bank of India (RBI) rate cut. If you are considering investing in Fixed Deposits (FDs) when the interest rates are high, now is the time.
Cooling Inflation: Why It Matters More Than You Think
Don’t we all feel a little relief when vegetables at the local shop cost less? That is because inflation is at a 6-year low of 2.1%, closer to RBI’s lower levels. The central bank’s sweet spot for inflation is at 4% but it is comfortable anywhere within its 2-6% range. And now, with inflation at the lower end, there is a good possibility of a repo rate cut, which may lead to an FD interest rate cut by financial institutions.
Remember how the RBI cut the repo rate by 1% (100 basis points), including a surprising 0.50% (50 bps) cut in June 2025? Now, the rate stands at 5.5%.
What is more, the central bank has stayed neutral in its approach since the last Monetary Policy Committee meeting. All these point to the fact that the RBI may reduce rates if needed or hold steady if inflation shows signs of returning.
You may be wondering why the RBI adjusts the repo rate based on inflation. This is because, when inflation is high, the RBI usually hikes the repo rate to make borrowing expensive. This cools off spending and helps bring prices down. On the other hand, when inflation is low, the RBI can afford to cut the repo rate. What this essentially does is encourage people and businesses to spend and invest more, helping the economy.
But that said, inflation is just one part of the repo rate equation. The RBI also looks at other factors like growth before deciding on its policy. If growth is slowing or the economy needs a boost, the RBI may cut the repo rate to encourage more lending and investment to help stimulate overall economic activity.
But Why Is Everyone Talking About FDs Right Now?
Inflation has slowed down and if past trends are anything to go by, another repo rate cut might just be around the corner. And when something like this happens, financial institutions don’t waste much time lowering their FD rates.
Yes, there might be some delay in banks and Non-Banking Financial Companies (NBFCs) lowering their interest rates because of a “transmission lag.” And what is this transmission lag? It is that short delay between the RBI adjusting the repo rate and financial institutions updating their rates.
But by the time most people react, the opportunity to invest in FD at high interest rates is gone. That is why locking in today’s high rates, before any actual repo rate cut is announced, helps you earn better returns.
What Makes Fixed Deposits Attractive In This Scenario?
FDs have always stood the test of time, but right now, their value stands out for a few reasons:
Booking an FD before an interest rate cut helps you preserve your capital. Your money stays locked in and you know what your returns are. And once you lock in your FD, the interest rate will not fall for that tenure, even if the RBI cuts the repo rate in the future.
Finally, booking a long-term FD when rates are still high not only gives your money time to grow through compounding, but also helps you earn better interest over the full tenure. And this further lets you build wealth steadily.
So, if you are thinking that FD rates will rise again and you will get better rates, waiting could mean you will only get lower rates for your FD. For many people, especially families, pensioners, and anyone seeking stable returns, acting now could help lock in the best of what is on offer.
Why Consider Shriram Fixed Deposit?
Shriram Unnati Fixed Deposit offers one of the highest interest rates at the moment, along with several other benefits. Booking an FD now helps you get high rates and build wealth in a smart and stable manner. Let’s take a closer look at what makes Shriram FD a compelling choice.
- High Interest Rates: Up to 8.15%*p.a., including a special rate of 0.50%* p.a. for senior citizens and 0.05%* p.a. for women depositors.
- High Credit Ratings: "[ICRA]AA+ (Stable)" by ICRA and "IND AA+/Stable" by India Ratings and Research.
- Flexible Tenures and Payouts: Choose tenures ranging from 12 to 60 months with flexible payout options – monthly, quarterly, half-yearly or yearly for non-cumulative FDs.
- Low Minimum Deposit: Starts from ₹5,000, making it accessible to investors.
- Online Booking: Invest in FD in minutes through the website or Shriram One mobile app.
- Cumulative Deposit Option: Choose the cumulative option to benefit from compounding and get both your principal and total interest at maturity.
Final Thoughts
The current slowdown in inflation is a silver lining if you are tightening your expenses. But what if you are considering investing in an FD? The opportunity is clear. You might want to lock your money in before financial institutions drop their rates again. FDs are still a smart and reliable way to grow your savings. And that will stay the same even if the rates change later!
Low inflation, falling repo rates, and the likelihood of further cuts all point to one thing. A potential rate cut. If you’re thinking about an FD, this may be your best chance this year. Stay informed, compare rates, and make your money work for you.
