Fixed Deposit RBI MPC 2026: Can FD rates increase due to rising inflation, eyes fixed on RBI’s decision, know details…

Business Desk – Fixed Deposit RBI MPC 2026: People investing in fixed deposits (FD) are now keeping a close eye on the meeting of the Monetary Policy Committee (MPC) of RBI. The results of the MPC meeting will be announced tomorrow, June 5, by RBI Governor Sanjay Malhotra. Only after this announcement will it be clear whether FD investors will benefit or not.

In recent times, due to rising inflation, expensive crude oil and weakening rupee against the dollar, speculations have intensified whether RBI will increase the repo rate. If this happens, then the hopes of FD investors getting more interest may increase. However, most experts believe that RBI will probably not make any changes in the repo rate right now. It will be maintained at the current level of 5.25 percent.

Effect of repo rate on FD interest rates

Repo rate is the rate at which RBI lends money to banks. As a result, when RBI increases the repo rate, banks usually increase their lending interest rates. Additionally, they also increase interest rates on Fixed Deposits (FD) to attract more deposits. On the contrary, if there is a cut in the repo rate, banks reduce their FD interest rates, and also reduce the interest rates on loans.

It is worth noting that during 2025, RBI had cut the repo rate by a total of 125 basis points. After this move, most banks reduced their FD interest rates. However, in the last two MPC meetings, RBI did not make any changes in the repo rate, which brought some relief to FD investors. Apart from this, some banks have also made a slight increase in interest rates for select periods.

According to experts, FD interest rates do not depend only on the repo rate. Banks also consider many other factors. These factors include demand for credit, availability of deposits, credit-to-deposit ratio and liquidity conditions within the banking system. If banks want to give more loans, but they are short of deposits, then they can increase interest rates on FD to attract more customers.

Can FD rates increase due to rising inflation?

Concerns about inflation have increased in recent months due to the rise in crude oil and gas prices. However, retail inflation which is measured by CPI. It stood at 3.48% in April 2026, which is below the RBI’s upper limit of 6% and medium-term target of 4%.

This is the reason why most economists currently consider the possibility of increasing the repo rate as low. Most experts believe that in the MPC meeting to be held in June 2026, RBI will keep the repo rate at 5.25%.

According to experts, inflation is still within the limits set by RBI. Economic growth remains under pressure, while global uncertainties and crude oil prices remain a matter of concern. In such an environment, RBI is likely to adopt a cautious approach.