June 15 (PTI) With inflation hovering much above the comfort zone, the Reserve Bank may raise key policy rates by 25 basis points in its first mid-quarterly review of the credit policy for FY’12 tomorrow.

“I think the RBI would take one more small step to curb inflationary expectations. Market is expecting a 25 basis points increase,” Indian Overseas Bank Chairman and Managing Director M Narendra told PTI.

One thing is certain, inflation is beyond the comfort level and the RBI has already expressed its concern on many occasions, he said.

In its annual policy document for 2011-12 released last month, the RBI had said that inflation control would be its primary focus in the near future, even as it agreed that the high rate of price rise would impact the country’s growth story.

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