On 20th March, the US Federal Reserve, in its FOMC meeting, indicated that it would start cutting interest rates in the second half of this year. The RBI is also expected to follow the US Fed by cutting interest rates. Let us understand whether this is a good time to invest in debt funds.
Interest rates and bond prices have an inverse relationship. So, when interest rates go down this year, the bond prices are expected to rally. It will lead to capital gains for investors holding these bonds.
