Rajan says watching inflation, monsoon, but policy still accommodative

NEW YORK (Reuters) - Reserve Bank of India governor Raghuram Rajan said he is closely watching inflation developments as well as monsoon rain forecasts in terms of impact on monetary policy, but noted that the central bank remains in an accommodative mode.

He said he cannot say when and by how much India will raise interest rates.

"As evidence of inflation and monsoon build one way or the other, this will give us more information about the direction of monetary policy," said Rajan, who spoke at the Inaugural Kotak Family Distinguished Lecture held at the Columbia Law School in New York.

"We're still in an accommodative mode. Precisely when and by how much we will raise interest rates, we will have to see."

Earlier this month the Reserve Bank of India cut its key lending rate by 25 basis points to 6.5 percent.

India's monsoon in the past two years has been poor resulting in some drought, but the La Nina weather phenomenon this year is expected to produce a better monsoon.

(Reporting by Gertrude Chavez-Dreyfuss)