On 7th june, their will be a meet for Reserve Bank of India Officials to decide on the possibility of further interest rate cuts. Rain-fed agriculture in India makes the country heavily dependent on rains for its food prices to remain benign and keep consumer price-led inflation low. With prices of vegetables and pulses already soaring, the RBI would rather go with caution, letting nature do its bit before tinkering with interest rates.

RBI has already cut interest rate several times in the last couple of years, taking the cut to a total of 125 basis points, since the easing cycle began.

Saugata Bhattacharya, chief economist, Axis Bank, said there are "too many uncertainties for the RBI to consider. Today's non-food payroll data in the US was a case in point, which showed just 38,000 job additions when the expectation was 158,000. It may be an anomaly but the Fed is certainly not going to hike rates in the June meeting. In India, rains, oil and food prices are a big worry. So the RBI would prefer to wait and watch, before bringing down rates."

"We expect RBI to be in a wait-and-watch mode in the June 7 policy meeting. We continue to hold on to our call for a 25 bps rate cut in August, on the back of our assumption that early rains will be adequate. By then, most of the other summer questions should have also found an answer," Bhandari added.

The reason that the RBI may hold interest rates steady is because inflation has been trending up. For the month of April retail inflation jumped to 5.39 %, on the back of large jump in food prices.

Thus the rise in retail inflation, may not allow the RBI to hike interest rates in the neat future.