"With below-normal monsoon and little policy action from Delhi, the Reserve Bank is likely to keep rates unchanged next week.
"The fiscal stance remains to loose for comfort and elevated inflation expectations are a concern," HSBC chief economist for India & Asean, Leif Eskesen, said in a report.
Though there has been policy progress in Europe, the global economic backdrop remains decidedly challenging, Eskesen said, adding domestic conditions have remained fairly stable, though, and underlying inflation has stayed firm.
Reserve Bank Governor Duvuuri Subbarao will unveil the first quarter monetary policy on Tuesday next and the government and the credit-starved industry are clamouring for some growth-enabling action from the Mint Road, in view of decelerating growth numbers and tepidly moving inflation.
While gross domestic product growth hit a nine-year low last fiscal at 6.5 per cent, inflation still remains elevated at 7.25 per cent for June.
Despite all the poor GDP numbers, the RBI left the policy rates and CRR unchanged at the last meeting on June 16.
But Eskesen said staying on hold was the right decision as RBI saw a big portion of the slowdown in growth unrelated to interest rates and instead more structural in nature, making rate cuts ineffective as a tool to raise
PIX: Assam violence continues; Gogoi meets riots victims
Services PMI dips a tad in June, but still in expansion mode
India's manufacturing growth inches up in June: HSBC
Monsoon deficiency to narrow down soon: IMD
Pranab: 'Perennial No. 2' is today India's First Citizen