US-Iran War Impact: Will RBI Raise Repo Rate And Push FD Rates Higher In MPC Meeting?

From inflation trends to overall market growth, several factors influence fixed deposit (FD) rates in India. However, one of the most important drivers is the policy decisions of the Reserve Bank of India (RBI). With the RBI set to hold its Monetary Policy Committee (MPC) meeting on April 8, attention has also turned to how the ongoing US-Iran conflict could affect the fixed deposit rates in India.

How The US-Iran Conflict May Impact FD Rates In India?

The US-Iran conflict has already begun pushing up prices of essential goods. At the same time, the Indian rupee has weakened significantly in recent sessions, slipping past Rs 92 per US dollar. This decline is largely driven by rising crude oil prices and a cautious approach by global investors.

Foreign portfolio outflows have added pressure on equity markets, while higher crude oil costs are increasing India's import bill. This combination is not only weighing on short-term growth but also raising concerns about inflation in the near future.

According to Bernstein, a global equity research firm, if the conflict continues for an extended period, the impact on the rupee could be severe, with the currency potentially weakening beyond Rs 110 per US dollar.

A weaker rupee and rising oil prices together heighten inflation risks. Since India depends heavily on energy imports, higher fuel costs tend to push up the prices of goods and services across the economy. Economists warn that a prolonged spike in energy prices could keep inflation elevated.

So far, the RBI has kept its repo rate unchanged at 5.25% in its December 2025 and February 2026 MPC meetings. However, if the conflict continues and inflation rises further, the central bank may find it difficult to hold rates steady.

In such a scenario, the RBI could increase the repo rate to control inflation. If that happens, banks and small finance banks (SFBs) are likely to follow suit by offering higher FD interest rates.

Commenting on the outlook, Adhil Shetty, CEO of Bankbazaar.com, told The Economic Times that while the RBI has made progress in controlling inflation, risks from food prices and global uncertainties remain. He added that given India's strong growth momentum, the central bank is expected to stay cautious and focus on maintaining inflation stability rather than cutting rates too soon.

Top 10 Banks Offering The Highest Fixed Deposit Rates

If you are looking to lock in your savings before the potential changes in the RBI repo rate take place, here's a list of banks offering the highest fixed deposit rates according to Paisabazaar.

Bank	Highest FD Rate (% p.a.)
Suryoday Small Finance Bank	8.10
Jana Small Finance Bank	8.00
ESAF Small Finance Bank	8.00
Shivalik Small Finance Bank	7.80
Utkarsh Small Finance Bank	7.50
Unity Small Finance Bank	7.50
Ujjivan Small Finance Bank	7.45
Equitas Small Finance Bank	7.40
SBM Bank	7.30
AU Small Finance Bank	7.10