Depositors deserve ‘real’istic interest rates
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Rising consumer inflation and falling nominal interest rates on bank deposits have led to low or negative returns for savers
Bank fixed deposits (FDs) are the only investment product people don’t think twice about before investing. They are considered the safest form of investment, ensuring that the tax-paid principal amounts are safe as many depositors are also regular taxpayers. FDs are also the most popular and trusted investment vehicle among senior citizens.
Worryingly, rising consumer inflation since June this fiscal (April and May figures not announced), combined with falling nominal interest rates on bank deposits as measured by the RBI’s Weighted Average Domestic Term Deposit Rate (WADTDR) has led to the real return on deposits turning negative or woefully low.
The Reserve Bank of India (RBI) is unlikely to further ease the interest rates in the next meeting of its Monetary Policy Committee even though retail inflation declined in December 2020, a report by Motilal Oswal Institutional Equities said. The Ecoscope report noted that the central bank is likely to continue with its calibrated approach towards the management of domestic liquidity. It is for the first time since the COVID-19 pandemic began that the CPI inflation has come within the RBI s target inflation range of 2-6%. What remains to be seen is if the downward trajectory in food prices continues during CY21. In any case, we do not expect any further monetary easing and the RBI is likely to continue to manage domestic liquidity in a calibrated manner, it said.
Retail inflation sees remarkable decline in December, can RBI think of cutting rates further?
The Consumer Food Price Index (CFPI) or the inflation in the food basket eased to 3.41 percent in the month of December, down from 9.50 percent in November. January 13, 2021 / 09:21 AM IST
India s Consumer Price Index (CPI), which measures the country s retail inflation, eased to 4.59 percent in December versus 6.93 percent in November.
This month s CPI has fallen within the Reserve Bank of India’s (RBI) upper margin of 6.
The Consumer Food Price Index (CFPI) or the inflation in the food basket eased to 3.41 percent in the month of December, down from 9.50 percent in November, as per the data.
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RBI unlikely to cut interest rates despite dip in December retail inflation: Report
The Reserve Bank of India (RBI) is unlikely to further ease the interest rates in the next meeting of its Monetary Policy Committee even though retail inflation declined in December 2020, a report by Motilal Oswal Institutional Equities said.
The Ecoscope report noted that the central bank is likely to continue with its calibrated approach towards the management of domestic liquidity. It is for the first time since the COVID-19 pandemic began that the CPI inflation has come within the RBI s target inflation range of 2-6%. What remains to be seen is if the downward trajectory in food prices continues during CY21. In any case, we do not expect any further monetary easing and the RBI is likely to continue to manage domestic liquidity in a calibrated manner, it said.