By Deepak Joshi NEW DELHI, APR 15 : Reserve Bank of India should use all flexibility available to it to tame inflation which was at an "unacceptable" level of 8.98% in March, Planning Commission deputy chairman Montek Singh Ahluwalia said Friday. "Current rate of inflation is significantly above what we regard as a tolerable rate of inflation. The preset rate of inflation is not at all acceptable I would say 6% is the maximum rate of inflation that we should be willing to accept," Ahluwalia told reporters after the data release. "They (RBI) have all the flexibility and they should use all the flexibility," he said but declined to elaborate what steps must be taken to bring down inflation. Government data showed Friday India's headline inflation at 8.98% for March 2011, much above central bank and analysts' expectations. In March, RBI revised upwards its inflation estimate for March to 8% from 7% earlier. Last week, economists polled by TickerNews forecast inflation at 8.36% in March while there was a feeling that it could top 8.5%. "It (inflation) has not come under control as much as I would have hoped. It is clear that underlying pressure on inflation remains a cause of worry. We should make sure fiscal balance, which the budget aims at should get realised," Ahluwalia said. The Planning Commission deputy chairman stressed the need for policy measures to curb present high inflationary trend. "The present situation (inflation) does not suggest it is going to happen automatically. The present rate of inflation is not at all acceptable. So we should do something about it," he said. Analysts expect a 25 bps hike in both repo and reverse repo at its policy review on May 3. Since 2010, RBI has raised repo by 200 bps, reverse repo by 250 bps and cash reserve ratio by 100 bps to anchor inflationary expectations. Filed by Raj Kumar Ray +91 (22) 66497000. feedback@tickerplantindia.com Copyright (c) TickerPlant Ltd.