Reserve Bank of India Governor Raghuram Rajan has two clouds hanging over him: the all-important monsoon effects, plus the political storms over whether he keeps his job.
In fact, the RBI's policy decision wasn't the main show this time around; the RBI will kept its benchmark repo rate at 6.50 percent, as expected.
Instead, economists expected the RBI's main focus to be on ensuring the broader economy felt the benefit of more than 150 basis points that have already been sliced from the main interest rate since the start of 2015.
The central bank will also be watching for meteorological storm clouds: the closely watched monsoon season and its impact on inflation. India depends primarily on rainfall for agricultural irrigation, and the quality of the monsoon season will have a large impact on inflation across the country. Too much or too little rain can lead to a poor harvest season, driving up food prices. The agriculture sector, which contributed around 18 percent of gross domestic product (GDP) in 2014, according to World Bank data, employs millions and spurts in food prices in the past have led to the ouster of governments.
In a note Monday, DBS noted that food inflation climbed in April and likely remained high in May due to warmer than usual weather.
DBS said in a note last week that the Indian Meteorological Department expected an above-normal monsoon in the June-to-September period, when the country gets most of its annual rainfall. The bank added that the rainfall was expected to be well-distributed around the country, particularly over the July-to-August planting-and-sowing peak period.