"Keeping in view the global trend in commodity prices and the domestic demand-supply balance, the baseline projection for wholesale price index (WPI) inflation at end-March 2010 is placed at 6.5 per cent with an upside bias."

Earlier, the central bank had projected the annual inflation rate at 5 per cent at the end of this fiscal.

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"As always, the Reserve Bank will endeavour to ensure price stability and anchor inflation expectations," Subbarao told the chief executives of commercial banks during the half-yearly review of the monetary policy.

"The conduct of monetary policy will continue to condition and contain the perception of inflation in the range of 4-4.5 per cent. This will be in line with the medium-term objective of 3 per cent inflation consistent with India's broader integration with the global economy."

Subbarao said the Reserve Bank was mindful of its fundamental commitment to price stability and would continue to monitor the situation in its entirety and take measures as warranted swiftly and effectively.