Reserve Bank of India (RBI) Raghuram Rajan is expected to keep key policy rates on hold at the December meeting, waiting to see the impact from an interest rate hike in the US, according to a poll.

All the 12 participants of the poll conducted by Business Standard expected the central bank to maintain status quo at its bi-monthly policy meeting on 1 December. State Bank of India, IDBI Bank, Royal Bank of Scotland, Canara Bank and Deutsche Bank were some of the participants in the poll, among others.

Rajan may wait to see the effect of expected rate hike by the US Federal Reserve at its two-day meeting on 15-16 December. If the US central bank decides to raise lending rate, Indian markets may witness heavy outflows weighing on the rupee.

In such a scenario, easing monetary policy rates could lead to further depreciation in the rupee. A falling rupee could stock inflation pressures curtailing the scope for RBI rate cuts.

So far this year, Rajan had cut the repo rate, a lending rate at which commercial banks borrow money from the central bank, from 8% to 6.75%. At the September meeting, he surprised the markets by announcing 50 bps cut against an expectation of 25 bps cut in lending rate.

Apart from the US Fed rate hike, domestic inflation developments have also reduced the room for the RBI rate cut announcement at December meeting.

Despite the Modi government's efforts to check soaring pulse prices, the commodity prices went up by 42% last month, recording the sharpest increase in a decade.

A spike in pulse prices led both the retail and wholesale inflation rates to move higher in October. While retail inflation inched up to 5% last month, the wholesale price index rose to minus 3.81% from minus 4.54% in the previous month.

"We are not really targeting that first round effect on food; we are worried about the second round effect on wages and are trying to make sure that is contained. Unfortunately, that sometimes means slower activity," Business Standard quoted Rajan as saying on 20 November, at an event in Hong Kong.

But, the Swiss brokerage UBS expects additional 25 bps rate cut this fiscal year based on lower inflation in the second half of the fiscal year, which is seasonally weak period for consumer prices to edge up even in case of "double-digit inflation".