Most bankers and experts believe that the possibility of an interest rate cut by the Reserve Bank on August 4 is very low as retail inflation remains high. However, India Inc is pitching for a rate cut because of low wholesale inflation and slowdown in industrial growth. Even the government wants the benchmark rate to be cut to prop up growth.

"I am not expecting any rate cut," SBI Chairperson Arundhati Bhattacharya said. "WPI is (negative), but CPI has gone up a little though it is mainly on account of food prices. RBI has been benchmarking it to CPI numbers, I think it is unlikely," she added.

While retail inflation in June rose to an eight-month high of 5.4 percent, the overall wholesale price index (WPI) based inflation was (-)2.4 percent in the same month.

RBI mostly tracks the consumer price inflation for its monetary policy decision. "It would be a status quo. I don't think there has been much change in the macroeconomic conditions from the last policy. RBI is closely monitoring monsoon. Nothing indicates that it is a good or a bad monsoon," Bank of Baroda Managing Director and CEO Ranjan Dhawan said.

Some bankers are of the view that there is scope for further rate cut by RBI, but whether it accommodates that in this policy is in the realm of speculation. HDFC Bank Deputy Managing Director Paresh Sukthankar said, "... it is difficult to hazard a guess on what move the RBI would be taking on Tuesday, but interest rates are on a downward trend. I expect RBI to cut rates by 25-50 basis points this fiscal."

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