"Given that the Indian economy still appears healthy, the RBI may consider further monetary tightening to cool inflation, which is a threat to social stability," Moody's Economist Sherman Chan said in a statement.
Against the RBI tolerance level of 5.5 per cent for the 2008-09, inflation for the week ended May 17 stood at 8.1 per cent.
In a bid to arrest price rise growth, RBI has already announced 0.75 per cent hike in CRR to suck out around Rs 27,000 crore (Rs 270 billion) from the system.
Even RBI Governor Y V Reddy in a speech last week had described rise in inflation as "totally unacceptable" as it affects the poor instantly.
According to US-based investment banker Lehman Brothers, "the dilemma between rising inflation and slowing growth will continue and we expect the central bank to tighten monetary policy using CRR hikes rather than repo rate hikes."
It expects another 100 basis points worth of CRR hikes during the course of the year with unchanged repo and reverse repo rates. Another global financial service provider Barclays Capital also holds similar view.
"We expect the RBI to continue withdrawing liquidity via cash reserve requirement hikes of at least 25-50 basis points within the next few months," Barclays Capital said in its emerging market research.
The monetary and credit policy
More from rediff