Interest rates are softening. The Reserve Bank of India Governor Raghuram Rajan in his credit policy in early April reduced repo rates by 25 basis points to 6.5 per cent. Rajan hinted at further rate cuts should monsoon be good this year.
Bankers too are seeing interest rates softening going forward. “Interest rates should soften during the year. It is towards the softening side,” ICICI CEO and MD, Chanda Kochchar said on Friday while releasing the bank’s Q4 2016 results.
Falling interest rate would have a definite impact your debt portfolio. Fixed deposits and other small savings will earn lower interest rates. In fact, recently the government cut small saving rates significantly. In such a scenario, debt mutual funds might emerge as a good investment option.
