Big decision on PPF interest rates today: Will returns reduce from 7.1%? Big update for investors

PPF Interest Rate Revision 2026: Today i.e. 31st December 2025 is a very important day for crores of investors of Public Provident Fund (PPF). The government is scheduled to announce interest rates for the period January to March 2026 in its quarterly review meeting today. The interest rate on PPF has remained stable at 7.1% for the last five years, but current economic indicators have increased the possibility of a cut this time. With government bond yields falling and inflation remaining under control, investors are worried whether their favorite tax-free returns are about to diminish.

The Mathematics of Bond Yield and Interest

According to the rules of Shyamala Gopinath Committee, PPF rates are linked to the yield of 10-year government bonds. Currently the average yield of the bond is around 6.54%, adding 0.25% margin the rate comes to around 6.79%. This is clearly much less than the 7.1% interest currently being received, which could become a major reason for the cut.

psychological effect of inflation rate

The retail inflation rate in November 2025 has been recorded at only 0.71%, which remains a historically low level. Experts believe that when inflation is low, the ‘real returns’ on savings schemes like PPF will increase. Increases considerably. Low inflation rates create pressure on the government to rationalize and cut interest rates.

Crisis on income of senior citizens

PPF is not only a savings medium but also the mainstay of retirement for crores of middle class families and senior citizens. If the government reduces interest rates, it will have a direct impact on their monthly income and future savings plans. Keeping this social security in mind, the government has not changed the rates for the last several years.

What do market experts say

Financial experts believe that PPF rates are currently running at a much higher premium than the bond market. According to Prime Wealth Finserv, there are good reasons for the government to reduce the rates, but it may also be kept intact due to political and social reasons. Now everyone’s eyes are fixed on the official order of the Finance Ministry coming this evening.

Also read: How will the budget of 2026 be? PM Modi held a big meeting with economists, prepared a masterplan

PPF compared to bank FD

Even if there is a slight cut in interest rates, PPF still remains an attractive option compared to fixed deposits (FD) of many big banks. The tax-free maturity available in it and the exemption available under Section 80C make it the first choice for investors. Even today, it is the most reliable savings instrument due to safe investment and government guarantee.