With inflation remaining at elevated levels, Reserve Bank of India (RBI) may gradually increase the benchmark lending rate to about 5.75 per cent by the end of this fiscal, Axis Bank chief economist Saugata Bhattacharya said on Thursday.

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He also said RBI may undertake front loading of interest rate hikes to tame inflation which have been over the central bank's tolerance level for the past 4 months.

RBI Governor Shaktikanta Das has already said the possibility of another hike at the June review is a "no-brainer".

The next meeting of the Monetary Policy Committee (MPC) is scheduled for June 6-8.

RBI, in its first rate move in two years and the first hike in nearly four years, raised the repo rate by 40 basis points to 4.40 per cent following an off-cycle meeting last month.

In April, RBI raised its inflation forecast for the current fiscal year to 5.7 per cent from earlier estimate of 4.5 per cent and lowered its GDP estimate to 7.2 per cent from 7.8 per cent for 2022-23, citing the impact of escalating geopolitical tensions triggered by the Russia-Ukraine war.

Bhattacharya expects RBI to raise repo rate to 5.75 per cent by the end of this year depending various data, including inflation and growth.

"Rate hike is very data dependent. If you see global growth coming very sharply or exports growth coming sharply... Then the extent of rate hikes that we are thinking now of 6 per cent odd by the end of the year that might not come to pass.

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"If inflation print continue over 7 per cent for sometime, the rate hike cycle may be shortened in that case," he said.

Asked if the government can levy windfall tax on Oil Marketing Companies (OMCs) to meet the deficit, Bhattacharya said that is a potential option.

"Oil companies have already been subjected to a degree of windfall tax because their inability to pass on the refinery throughput cost out into pump prices," he said. PTI DP CS