The Reserve Bank of India (RBI) has cut the repo rate by 50 basis points to 5.50% and reduced the Cash Reserve Ratio (CRR) by 1% to 3%, aiming to boost economic growth while managing inflation. This marks the third rate cut in 2025, totaling a 100 basis points reduction. The CRR cut injects ₹2.5 lakh crore into the banking system, enhancing liquidity and supporting credit growth. These changes significantly impact debt fund investors, particularly those in long-term debt funds like gilt and dynamic bond funds, which benefit from falling interest rates. However, with the RBI's shift to a 'neutral' stance, further rate cuts are unlikely, suggesting limited capital appreciation potential. The rate cuts also make debt mutual funds more attractive compared to fixed deposits, offering better post-tax returns.