Asian stocks mostly down, market eyes on India’s Interest rate decision

The Reserve Bank of India (RBI), the country's central bank, is due to announce its third bi-monthly policy review on Tuesday. RBI Governor Raghuram Rajan will have to find a balanced approach in his steady fight against inflation and the growing chorus of calls from India's business community.

The RBI has cut its key rate three times by a cumulative 0.75% in the January-June period to the current main repo rate at 7.25%.

While business people in India are keenly waiting for monetary policy loosening and the erratic monsoon rains are improving, there is certainly scope for another rate cut on Tuesday. However, inflation will definitely also remain in focus as it edged up to an eight-month high in June.

The monsoon season started with some failures in seasonal rains, feeding fears that the erratic weather patterns could translate into a skyrocketing rise in prices of food. Consumer price inflation added 5.4% in June, following 5.0% growth in May. Meanwhile, wholesale inflation has declined for eight consecutive months. However, monsoon rains picked up in July and the pace is now expected to continue in August.