Mumbai: The Reserve Bank of India (RBI) will build on measures already taken to manage demand as it extends its battle to combat inflation, which hit a 13-year high of 11.05 per cent early in June, governor Y V Reddy said.

Speaking at a function in Pune, Reddy, however, said the inflation is unlikely to have any adverse impact on economic growth.

"On the basis of current information, we don't come to the conclusion managing this problem will necessarily involve sacrificing growth,'' he said.

"We expected some pressure on prices due to pass-through of oil prices and have been taking pre-emptive measures in general in view of lagged effects of such measures on the economy," he said, adding, "We are currently in the midst of intensive examination of issues and options."

While the RBI had projected economic growth at 8-8.5 per cent in the current fiscal ending March 2009, analysts expect a tight-money policy to moderate growth.

The RBI raised its key repo rate by 25 basis points to 8.0 per cent,   in a surprise move on 11 June, the first rate hike in over the past one year.

The RBI had earlier raised banks' reserve requirements, the cash reserve ratio (CRR), to 8.25 per cent to suck off excess cash in the system.

Reddy said India was better placed than other countries to face the shock of unprecedented high oil prices because of a positive outlook on the food front.

High oil prices remained a ''concern,'' he added.

With the tax cuts on fuel prices combined with the oil bonds and fertiliser subsidies pushing the centre's fiscal deficit to over 6.5 per cent of GDP against the budgeted 2.5 per cent, analysts expect the RBI to raise the cash reserve ratio by 50 to 75 basis points and hike the repo rate by a full one percentage point.