RBI holds repo rate at 5.25%: Is this the peak for fixed deposit returns? Here's what investors should consider

The Reserve Bank of India's decision to keep the repo rate unchanged at 5.25% for the fourth consecutive monetary policy review has reinforced stability in deposit rates, but the outlook for fixed deposit (FD) returns remains less certain as inflationary pressures continue to build.

While the status quo means banks are unlikely to make immediate changes to deposit rates, experts say the current rate environment presents an attractive window for savers. At the same time, a sustained rise in inflation could prompt the RBI to tighten monetary policy in the coming quarters, potentially leading to higher FD rates.

Current FD rates remain attractive

Following the RBI's decision, banks are expected to maintain existing deposit rates. According to Adhil Shetty, CEO of BankBazaar, public sector banks are currently offering 6.6% to 6.8% on one- to three-year fixed deposits, while private sector banks are offering 6.4% to 7.0% for similar tenures.

"By keeping the repo rate unchanged at 5.25%, the RBI has supported stability in deposit rates. Public sector banks are currently offering around 6.6% to 6.8% on popular one to three-year fixed deposits, while private banks are offering roughly 6.4% to 7.0% for similar tenures," Shetty said.

He added that instead of investing the entire corpus in a single deposit, investors should consider laddering FDs across different maturities. "This provides periodic access to funds while reducing the risk of locking the entire corpus into one interest rate. As always, investors should evaluate returns after factoring in taxes and inflation, not just the headline FD rate," he said.

ALSO READ: RBI MPC: Gov Malhotra raises GDP growth projection for this year to 6.7% from 6.6%

Are FD rates close to their peak?

Although the RBI has maintained the repo rate since December 2025, several factors could still influence banks to revise deposit rates.

Inflation has been moving steadily higher, with the consumer price index (CPI) rising to 4.38% in June, compared with just 0.25% in October 2025. If inflation remains elevated or moves closer to the RBI's upper tolerance limit of 6%, markets could begin pricing in the possibility of future policy tightening.

Banks are also facing a widening gap between credit growth and deposit mobilisation. Credit has been expanding faster than deposits, increasing the need for banks to attract fresh deposits through competitive interest rates.

At the same time, elevated yields on government securities and attractive returns offered by small savings schemes such as the Senior Citizens Savings Scheme (SCSS) and Sukanya Samriddhi Yojana, both offering 8.2%, continue to put competitive pressure on banks.

What should investors do?

Experts believe the current environment favours investors seeking stable income while remaining flexible.

Saurabh Jain, Co-Founder and CEO of Stable Money, said the RBI's decision provides greater certainty for fixed-income investors.

"The RBI's decision to keep the repo rate unchanged provides stability and predictability for fixed-income investors. For depositors, it means the current interest rate environment continues to offer an attractive opportunity to lock in FD returns, particularly for those looking for low risk and steady returns. A stable rate cycle is also supportive for the bond market, allowing investors to benefit from predictable income while diversifying across different tenures and issuers. This is a good time to build a balanced fixed-income portfolio by combining FDs and high-quality bonds, helping investors optimize returns while creating greater resilience across market cycles," Jain said.

MUST READ: RBI targets rollout of polymer ₹10, ₹20 notes at start of April 2027; check details

For investors with FDs maturing over the next few months, financial planners recommend avoiding an all-or-nothing approach. Instead of locking the entire amount into a long-term deposit, staggering investments across multiple maturities can help capture potentially higher rates if banks revise deposit rates later, while ensuring a portion of savings continues to earn attractive returns today. Such a strategy also improves liquidity and reduces reinvestment risk in an uncertain interest rate environment.