"In my view RBI may go for a pause this time," Federal Bank MD Shyam Srinivasan said. According to PNB chairman and MD, KR Kamath, the RBI action will depend on outlook on inflation.

The annual rate of inflation, based on the monthly wholesale price index, stood at 4.68% in February. Retail inflation was at a 25-month low of 8.1 percent in the month.

Morgan Stanley said volatility in food prices and a base effect will result in the CPI inflation going up to 8.5% in the near-term and cooling off to 6.5 percent by December. "We see risks emerging to the food inflation outlook due to the recent weather-related concerns prompted by unseasonal rain and hailstorms in some parts of the country," it said.

Raghuram Rajan, who took charge as RBI governor last September, raised the rates during his first policy announcement, rightly foreseeing pressure on the inflation front. He increased it again for a third time since he took charge, in January, when the market was expecting a pause.

It can be noted that even though the RBI has not formally adopted inflation targeting, it has gone public on targeting consumer price inflation down to 8% by January 2015 and further down to 6 percent by January 2016, as per the recommendations of the Patel committee.

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