India's central bank is widely expected to leave its interest rates unchanged on Tuesday as it awaits more signs on the price front to confirm a slowdown in inflation.
The repo rate, the rate at which the Reserve Bank of India lends to banks, is likely to be maintained at 8.00 percent for the third straight policy meeting.
The rate has been raised by 75 basis points since Raghuram Rajan took the helm of the central bank last September.
The RBI is also expected to retain its reverse repo rate at 7.00 percent. The reverse repo rate is the rate at which the central bank accepts deposits from banks.
The cash reserve ratio is also likely to be retained at 4 percent.
According to official data, consumer price inflation eased to 7.31 percent in June from 8.28 percent in May. Wholesale price inflation fell to 5.43 percent in June, the lowest since February, from 6.01 percent in May.
The central bank aims to bring consumer price inflation down to 8 percent by January 2015 and 6 percent by January 2016.
The Purchasing Managers' survey for July showed that India's manufacturing activity improved for the ninth straight month to a 17-month peak as companies scaled up production in response to strong demand.
The central bank is under pressure from various sectors to cut its rate as higher borrowing costs weigh on productive activity in the economy.
However, geopolitical instability in Ukraine and the Middle East is pushing oil prices higher and is set to feed into inflation. Moreover, a rate cut would weaken the rupee, making imports costlier.
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