'Rate cut likely in March if budget addresses fiscal issues'

RBI

The RBI has also expressed concerns over high CAD and said a high CAD will threaten macroeconomic stability and impact growth.

"Large fiscal deficits will accentuate the CAD risk, further crowd out private investment and stunt growth impulses," RBI had said in its third quarter monetary policy review.

Meanwhile, Bank of America Merrill Lynch in a report said that RBI will switch to supporting growth from exclusively fighting inflation and is is expected to "prepone" policy rate cuts (by 0.25 per cent each) on March 19 and May 3.

According to the report, RBI has a six-month window as inflation will likely pierce 7.5 per cent in the second half this year on hikes in diesel prices and power tariffs.

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