This is going to be the last bi-monthly monetary policy to be decided by the central bank Governor as the broad-based 6-member panel may take over the job before the next review on October 4.
In conjunction with naming its 3 members on the Monetary Policy Committee, the government is also likely to name a successor to Rajan sometime this month.
The government announced last week that it would like the RBI to focus on maintaining retail inflation rate of 4 per cent for the next five years, based on which the new interest rate setting panel would take its monetary policy decisions going forward.
"We are expecting that there will be no change in rate because vegetable prices are on the rise... It will take a few months for the vegetable prices to come down when the kharif crops come into the market," SBI Chairperson Arundhati Bhattacharya said.
Also Read
He said rates are coming down across geographies including the UK, which has strengthened the case for a rate cut by RBI.
"Lot of favourable developments in the economy - above average monsoon, low G-Sec rate, high forex reserve, low bond yield, twin deficit well within the range - augur well for rate cut of at least 0.5 per cent," he said.
Rajan, criticised for following hawkish monetary policy for too long before starting to lower rates, has reduced the benchmark interest rate by 1.5 per cent since January last year, and has been persuading banks to fully transmit the benefit of the policy rate cut to customers.