Debt fund outlook: Choice of fund class must match horizon, risk appetite

Fund managers foresee two more rate cuts of 25 bps each in the coming policies

The Reserve Bank of India (RBI) cut the repo rate by 25 basis points (bps) to 6 per cent on April 9, its second consecutive reduction following the 25-bps cut on February 7. It also shifted its monetary policy stance from “neutral” to “accommodative”.  

Outlook on interest rates 

Fund managers foresee two more rate cuts of 25 bps each. “There will be a cumulative rate cut of 100 bps in this cycle, resulting in a terminal repo rate of 5.5 per cent over the next three to six months,” says Mahendra Kumar Jajoo, chief investment officer (CIO) – fixed income,