NEW DELHI, India: Reserve Bank of India (RBI) deputy governor Michael Patra says India's retail inflation is likely to breach the target tolerance band of 2 to 6 percent for three straight quarters, but it is showing indications of peaking.

"The RBI Act mandates that in case the inflation target is not met for three consecutive quarters, which is the likely scenario, the RBI shall set out a report to the central government, and in that report it will state the reasons for failure to achieve the inflation target," Patra said, as reported by Reuters.

In May, retail inflation eased somewhat after reaching an eight-year high of 7.79 percent in April, but it remained higher than the central bank's tolerance band for a fifth consecutive month.

Speaking at an event organized by the PHD Chamber of Commerce and Industry, Patra said core measures of inflation were showing signs of second-round effects, warranting monetary actions.

However, he added that the Reserve Bank of India hopes any further monetary policy steps will be more moderate compared to the global tightenings, noting that internal research has indicated that growth is "unambiguously impaired" when inflation exceeds 6 percent, making it imperative to act on price pressures.

The rupee has been affected by high inflation, which drove it to record lows, while bond yields have been rising on expectations of aggressive monetary policy tightening and a record government borrowing program.

The RBI will defend the rupee from extreme volatility and not allow any "jerky or disorderly movements," Patra stressed, describing the current level of bond yields as "uncomfortably high."

However, the Reserve Bank of India would take measures to ensure yields move in an orderly fashion and the government's borrowing requirement is smoothly completed, he added.