The Reserve Bank of India (RBI) has kept the repo rate constant at two consecutive Monetary Policy Committee (MPC) review meetings. Earlier, bank fixed deposit (FD) rates were rising alongside the increase in policy rates. RBI's pause invites the question whether FD rates have peaked too.
The US Federal Reserve (Fed) also paused this month. “Most global central banks are close to completing their interest rate increases. Commodity prices, such as crude oil, have stayed relatively stable in recent months. This implies that we might be approaching the peak of the interest rate hike cycle,” says Raj Khosla, founder and managing director (MD), MyMoneyMantra.com.
The liquidity factor