Moody's Investors Service today said the 25 basis point cut in the policy rate by RBI is in line with market expectations and cautioned that inflation could rise in the event of unfavourable monsoon and a sharp currency depreciation. Moody's said a moderate growth in India, spare capacity in industry and low global commodity prices will help maintain inflation around the current levels.The agency said factors like liquidity provision and progress towards cleaning up banks' balance sheets will determine financing conditions. It said it is via sustained GDP growth at or above the current levels that fiscal consolidation is likely to be achieved rather than through broad-ranging reforms of public spending and revenue-raising measures.