Money Saver India
Interest Rates may fall even without RBI help

Interest Rates may fall even without RBI help

Surge in small savings levels may lead to lower interest rates for consumers according to a report in the Economic Times.

India’s leading financial newspaper, The Economic Times, reported this morning that though RBI Governor Raghuram Rajan is unlikely to cut interest rates in RBI’s policy review next week, the sharp increase in small savings could have the same effect. The Government of India will not need to borrow as much money as it had anticipated which could in turn see interest rates softening.

This, if it happens, will come as a surprise to many because despite lower inflation and stagnating economic growth, most people expect the RBI to retain its hawkish stance on interest rates.

With a last minute rush from small-saving investors who want to save tax and take advantage of the current high interest rates being offered, it is likely that this will further reduce the need for government borrowings.

Lower interest rates would potentially mean lower EMIs for consumers. However, it would also mean lower yields on your savings. i.e. good news for spenders and not so for savers.

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