A change in the repo rate significantly impacts fixed deposit (FD) interest rates. Here's what you need to know: Impact on Existing FDs - *No Change*: If you already have an FD, the interest rate remains unchanged until maturity. You won't be affected by the repo rate cut. - *Renewal*: When your FD matures, renewal might offer a lower rate if banks cut their rates in response to the repo rate change ¹. Impact on New FDs - *Lower Interest Rates*: When the repo rate is lowered, banks may reduce FD rates. This means new FD investments will likely earn lower interest rates. - *Higher Interest Rates*: Conversely, when the repo rate increases, banks often raise FD interest rates to compensate for higher borrowing costs, resulting in better returns for FD investors. Strategies for FD Investors - *Lock in Higher Rates*: If repo rates have been cut, FD rates may soon decrease. It's better to lock in current higher rates before they drop further. - *FD Laddering*: Consider using FD laddering strategies to optimize returns in a changing rate environment. - *Special Tenure FDs*: Look into special tenure FDs, like 444-day or 555-day deposits, which may still offer attractive rates ¹. Key Takeaway The repo rate change directly affects FD interest rates. When the repo rate is cut, FD rates tend to decrease, and when it's hiked, FD rates tend to increase. Keep an eye on repo rate changes to make informed decisions about your FD investments ².