The Reserve Bank of Australia (RBA) is widely expected to cut interest rates tomorrow.

Last month, a better-than-expected inflation report significantly boosted chances of a July rate cut. The Consumer Price Index (CPI) for May came in at an annualised 2.1%. Crucially, this was towards the lower end of the RBA's target range of between 2% and 3%.

Following this piece of macroeconomic data, all Big Four Bank economic teams are expecting a rate cut tomorrow.

That's great news for the 3.3 million Australian households with a mortgage. 

The RBA is expected to cut by 25 basis points. That would take the cash rate from 3.85% to 3.60%.

How much will homeowners save?

According to Yahoo Finance, the average homeowner will save around $105 a month and $1,262 a year, should this occur (assuming banks pass on the rate cut in full). 

That figure is based on the average $659,920 home loan.

Where to from here?

The majority of experts are expecting another interest rate cut to be delivered in August, bringing further relief to mortgage holders. 

All four big banks are among the majority. 

Looking further ahead, National Australia Bank (ASX: NAB) and Westpac (ASX: WBC) are predicting an additional rate cut in November. That would be a total of three rate cuts including July. 

Westpac is the only major bank that expects the RBA to deliver four more interest rate cuts.

What should I do with extra cash?

Those looking to redeploy savings from interest rate cuts have several options. 

Firstly, they could put it into a term deposit. However, according to the Vanguard 2024 Index Chart, investing in cash has returned an average of 4.2% over the past 30 years. 

A second option is to buy shares. Based on the past 30 years, Australian shares have increased at 9.1% per annum, according to Vanguard. That's almost double the return on cash. 

For diversified exposure in a single trade, Australians could buy Vanguard Australian Shares Index ETF (ASX: VAS), which tracks the 300 largest listed companies in Australia. 

Alternatively, they could buy individual stocks that they believe will eat the market. 

Newmont Corporation CDI (ASX: NEM) is Macquarie's top pick in the gold mining sector. The broker has placed a price target of $105 on the stock. 

Over the weekend, The Motley Fool's James Micklemoro also named CSL Ltd (ASX: CSL) as a potentially compelling pick at today's price. James cited broker Bell Potter's view that CSL is in the midst of a margin recovery cycle that should drive above-market earnings growth over the coming years. CSL is also trading on a forward P/E of 21.2x, which is below its 10-year historical average of 31x.

Newmont shares are up 51% for the year to date, while CSL shares have declined 14%.