Opt for 3- to 6-month fixed deposits for now; lock in at higher rates later

Home loan borrowers must pre-pay, or opt for higher EMI, to prevent loan tenure from rising

After the Reserve Bank of India (RBI) Governor Shaktikanta Das’s comment some last month that a rate hike in the June monetary policy was a no-brainer, the focus had shifted to the quantum of the hike. The central bank chose to front-load its rate hikes by opting for a 50-basis-point (bp) increase.

Staggered rise in deposit rates

Usually, bank deposit rates lag the repo rate, as was evident after the hike in May. “The pace of hike in deposit rates in the future will depend on credit demand and overall liquidity in the system. Any further growth in credit demand,