After catching markets off guard with an unscheduled rate cut last month, the Reserve Bank of India’s (RBI) rate decision on Tuesday is a close-call.
On one hand, the RBI may want to take advantage of the suitable backdrop of lower inflation and market stability to deliver an additional rate cut, say economists.
On the other hand, the central bank may want to wait until the presentation of the budget on February 28 to gauge the government’s commitment to fiscal consolidation and reform before easing further.
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