Bank FD to fetch negative real interest with elevated inflation

Senior citizens and others depending upon income from bank fixed deposit (FD) schemes will be at the receiving end with the retail inflation exceeding the interest rates. The Reserve Bank of India (RBI) in its latest monetary policy review has projected retail inflation at 5.3 per cent for the current financial year. Last week, the RBI said that the Consumer Price Index (CPI)-based inflation is now projected to be at 5.3 per cent for 2021-22 with risks evenly balanced. At this level, the fixed deposit for one year with the country's largest lender State Bank of India (SBI) would rather earn negative interest. The real interest rate would be (-) 0.3 per cent for the saver. Real rate of interest is card rate minus inflation rate. The retail inflation for August stood at 5.3 per cent.

News Source:- https://economictimes.indiatimes.com/industry/banking/finance/banking/bank-fd-to-fetch-negative-real-interest-with-elevated-inflation/articleshow/86966860.cms