India to keep key rate unchanged

BANGALORE, July 31 (Reuters): The Reserve Bank of India (RBI) is likely to leave its key interest rate unchanged on August 5 and won't ease policy until early next year on fears food inflation will spike if monsoon rains are below average, according to a Reuters poll.
Nearly all the 43 economists surveyed over the past week expect the RBI to leave its key repo rate on hold at 8 per cent.
Median forecasts show the rate staying unchanged until the end of this year, before being cut to 7.75 per cent in the first quarter of 2015. Between now and mid-2016, the RBI is expected to cut rates by 75 basis points.
Although both wholesale price inflation (WPI) and consumer price inflation (CPI) eased in June, some forecasters warned inadequate rains could lead to higher food inflation.
Concerns that India could face its first drought in five years have abated after rainfall increased in mid-July, but the poor start to the monsoon made farmers postpone summer sowing.