The Reserve Bank today did not rule out taking more action before the next policy review to tackle rising inflation.
"I will not rule out mid-cycle action because we do not know how the situation will evolve ... But I want to say that that is not something we will do lightly. We will think many times before taking mid-cycle action," RBI Governor D Subbarao told media persons.
RBI is scheduled to come out with quarterly review of the monetary policy on July 27.
The central bank today hiked key policy rates by 25 basis points each to tame inflation. It raised the cash reserve ratio, the amount of cash deposits banks park with RBI, to 6 per cent.
With 25 basis points increase, the repo and the reverse repo (short-term lending and borrowing rates) stand at 5.25 per cent and 3.75 per cent, respectively.
Before today's hike, the key policy rates were raised by 25 basis points each on March 19.
"That (policy action in March) is not something which we have done lightly. We have done that after considerable thought because we have thought it not advisable to wait for the scheduled policy," Subbarao said.
Inflation is nearing the double digit mark and stood at 9.90 per cent for March, much higher than the RBI projections of 8.5 per cent.
Everything need not be done in one step, he said, adding "we believe that moving in several baby steps towards normalisation is better for economy to adjust to pre-crisis growth level."
The central bank said it has taken into account the government borrowing requirement, inflation dynamics and the liquidity in the system before raising the key policy rates.