Economists see no rate cut by RBI in 2017

Rate cuts in both India and US would squeeze the difference and could lead to an outflow

The US Federal Reserve's 25 basis points rate increase and its indication of two more rises in 2017 might have nixed the chance of the Reserve Bank of India (RBI) cutting its rate.

Being an emerging market that needs foreign portfolio funds to bridge its current account deficit, India needs to maintain a certain interest rate differential, to attract dollar investors. A rate cut in India and a rate hike in the US would squeeze that difference and could lead to an outflow. And, India's inflation rate is unlikely to remain soft in the coming months, as was evident