RBI rate cut: Lock into prevailing FD rates before they decline further

Debt-oriented fund-of-funds, like income-plus-arbitrage funds and arbitrage funds are good options for debt fund investors

The Reserve Bank of India (RBI) on Thursday lowered the repo rate by 25 basis points to 5.25 per cent, taking the total reduction in 2025 to 125 basis points. Now that the regulator has ushered in a relatively low-rate phase, fixed-income investors should avoid knee-jerk reactions and respond in a well-thought-out manner to this regime.

 

Will rates be cut further? 

Fund managers broadly agree that the RBI is nearing the end of the current rate-cut cycle. “The scope for aggressive easing is limited. Inflation is near record lows now. But we believe that the RBI may focus