RBI seen cutting rates, but it will be a close call" 

India's falling inflation rate gives the Reserve Bank of India (RBI) room to cut its policy rate to a more than six-year low to help an economy hit by a crackdown on cash. The question is whether the RBI will pull the trigger on Wednesday or wait until April. A Reuters poll last week, conducted before the government presented its annual Budget, showed 28 of 46 participants expected the RBI on Wednesday to cut the repo rate by 25 basis points to 6.0 percent, its lowest since November 2010.

 Another two expected a 50 bps cut. That slight bias toward a cut now remained in place after the government delivered a Budget that kept its fiscal deficit target for the year starting in April at 3.2 percent of gross domestic product, below the 3.3 to 3.5 percent expected by analysts. The fiscally prudent Budget could comfort the RBI's six-member monetary policy committee (MPC), and raise the prospect of a rate cut sooner rather than later, given price trends. Consumer inflation fell to a two-year low of 3.41 percent in December - below the RBI's end-March 2017 target of 5 percent and medium-term target of 4 percent. 

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