MUMBAI: It is the right time to lock in your money in long term fixed deposits, if you have not done it earlier, say experts. Fall in gold prices and oil prices have made many experts speculate on a possible fall in bank fixed deposit rates in near future.
In April, brent crude oil prices went down by 9%, whereas Mumbai standard gold prices corrected by 12.5%. This has made many think that Reserve Bank of India may opt for a rate cut. This fall in prices would result into lowering the current account deficit, which is a key concern for Reserve Bank of India. Also lower energy prices connote lower inflation in future, which should set the stage right for the cut in interest rates.
"We maintain that the possibility of a rate cut by RBI has gone up during its policy meet on May 3," says Amit Tripathy, Head- Fixed Income at Reliance CapitalBSE 0.28 % Asset Management in his recent note. The banks too are expected to reduce the interest rates on fixed deposits.
"Banks may cut 25 basis points in the interest rates payable on short term fixed deposits that mature in less than one year and 50 basis points in interest rates payable on long term fixed deposits with maturities between one to three years," says Harshavardhan Roongta, certified financial planner, Roongta Securities.
Investors have already seen some banks in cutting interest rates in the first half of April. Punjab National BankBSE -0.18 %, Oriental Bank of CommerceBSE 0.00 % and Bank of BarodaBSE 0.21 % have reduced interest rates on fixed deposits by 25 to 50 basis points on varying maturities.
In April, brent crude oil prices went down by 9%, whereas Mumbai standard gold prices corrected by 12.5%. This has made many think that Reserve Bank of India may opt for a rate cut. This fall in prices would result into lowering the current account deficit, which is a key concern for Reserve Bank of India. Also lower energy prices connote lower inflation in future, which should set the stage right for the cut in interest rates.
"We maintain that the possibility of a rate cut by RBI has gone up during its policy meet on May 3," says Amit Tripathy, Head- Fixed Income at Reliance CapitalBSE 0.28 % Asset Management in his recent note. The banks too are expected to reduce the interest rates on fixed deposits.
"Banks may cut 25 basis points in the interest rates payable on short term fixed deposits that mature in less than one year and 50 basis points in interest rates payable on long term fixed deposits with maturities between one to three years," says Harshavardhan Roongta, certified financial planner, Roongta Securities.
Investors have already seen some banks in cutting interest rates in the first half of April. Punjab National BankBSE -0.18 %, Oriental Bank of CommerceBSE 0.00 % and Bank of BarodaBSE 0.21 % have reduced interest rates on fixed deposits by 25 to 50 basis points on varying maturities.
Source : http://economictimes.indiatimes.com
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