The RBI also hiked the outlook for annual inflation rate to 8.5 pc by the end-Mar 2010.
RBI Governor D Subbarao said he also expected the country's growth rate of 7.5 pc to be sustained in the next fiscal.
Subbarao presented the third quarterly update of the monetary policy before chief executives of commercial banks.
"As with growth, we shall formally announce our inflation projection for 2010-11 in our monetary policy in Apr 2010," he said.
The central bank had earlier pegged the growth rate at 6 pc and inflation at 6.5 pc.