2. Go for bonds for better savings

An interest rate cut is not good news for those who still choose to park all their money in fixed deposits. The wise thing to do now therefore is to look for other attractive investment avenues. Several long-term debt funds have given stellar returns in the past three to six month period.

In recent times, the bond market has begun to factor in the fall in inflation and a subsequent rate cut. As a result, the benchmark bond yield is now hovering around 8.4 per cent, which is a sharp decrease from 9 per cent this year. This is, therefore, a good time to make an entry into long-term debt funds to make the most of a bond rally.

3. Best time for borrowers

For those of who are going for home loan shopping, this is good news for you. Home loans could be cheaper if a rate cut is announced. Home loans at a floating rate of interest are trending between 10.4 per cent- 10.9 per cent per annum. Even if you are an existing home owner and pay a floating rate of interest, you can benefit from the rate cut.

If the rate cut is substantial, you can go back to your lender and ask them to trim your EMI component or reduce your loan tenure. If your bank does not seem too keen on realigning your loan agreement to benefit you more, you can always consider the option of refinancing your loan and move to a bank which is offering you a better rate of interest.