India's RBI will likely cut the key policy rate by a maximum of 50 bps in the fiscal year ending March 2013, as it is likely to wait for fiscal reforms from the government before further monetary easing, says Nitesh Ranjan, an economist with Union Bank. He says, "a repo rate cut was the need of the hour considering the growth downtrend, also the core inflation rate seems comfortable." Ranjan adds, the RBI may stand pat at the next policy also as it will await the government to go for more reforms convincingly after the coalition government at the centre decides on a president. "The RBI will be measured from their side from now onwards and will stick to its inflation bias. In absence of quick reforms growth will see more downtrend." India's central bank deals a surprise to the market by keeping its key lending rate unchanged at 8.00% citing persistent inflationary pressures in the economy.
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