The Reserve Bank of India (RBI) resumed its rate hike cycle at its quarterly monetary policy review on Tuesday as soaring inflation stalks Asia’s third-largest economy. RBI raised repo and reverse repo rates by 25 basis points each. Repo rate, the one at which RBI lends to banks will now be 6.50%, reverse repo, the rate banks receive for depositing funds with the central bank will be at 5.50%. Cash reserve ratio, the proportion of deposits that banks have to keep aside, was left untouched at 6%. RBI also raised March inflation forecast to 7% from 5.5% and warned that higher food prices could become entrenched if steps to boost output are not taken. The central bank maintained that India’s GDP will grow at 8.5% for FY-2011.The wholesale price index (WPI) , India’s main inflation gauge, is expected anti aging skin care to rise by an average 8.8 percent for the fiscal year ending March 2011 before easing to 6.4 percent in the following year. This is considerably higher than 8.3 and 5.7 percent forecast in the October survey. Driven by costlier food items, wholesale price inflation soared to an annual 8.43 percent in December, compared with an expected 8.35 percent and above the previous reading of 7.48 percent. Many economists now believe the Reserve Bank of India (RBI) will be forced to undertake much swifter policy tightening than was previously foreseen. Price growth would remain above the RBI’s comfort levels, according to the latest poll, averaging 7.7 percent in the quarter ending March before easing to 5.5 percent in the second half of 2012 — a level the central bank had hoped to reach by March this year.