Will FD rates go up in October as inflation rises?

The Consumer Price Index (CPI) inflation for August 2026 rose to 4.8% year-on-year, indicating a continued upward trend. This figure is still below the Reserve Bank of India's (RBI) upper tolerance limit of 6%, but the persistent inflation may push the RBI to hike the policy rates (repo rate) in October and December Monetary Policy Committee (MPC) meetings.

This could lead to higher fixed deposit (FD) interest rates, as banks aim to attract more deposits to compensate for the higher funding costs. A high credit-growth ratio, a high 10-year G-Securities yield, and high interest rates of small savings schemes further suggest a probability of increased FD rates in the near future. Banks and investors closely monitor these indicators to gauge the impact of rising inflation on FD interest rates.