New Delhi, Sept. 19 -- The Reserve Bank of India may face increased pressure to begin raising interest rates as early as October after the US Federal Reserve adopted a hawkish stance and the India-US interest rate differential narrowed further, Yes Bank said in a research report.

The probability of an RBI rate hike in October has increased, although the central bank's decision will continue to depend on domestic growth and inflation dynamics, the report said. It added that firm global crude prices, higher headline CPI in August and a rise in core inflation could provide the basis for an RBI move.

However, the effectiveness of any rate hike could depend on the RBI's ability to absorb surplus liquidity, with the weighted average call rate...