Catalan leader Carles Puigdemont has threatened to declare independence early next week, and hundreds of thousands of Catalan protesters marched in favor of splitting from Spain this week.
"It is evident that we will take whatever decision that we are permitted to by law, in view of how things are unfolding", Rajoy told the El Pais newspaper in an interview.
Many in the crowd forming in a central square are carrying Spanish and Catalan flags.
People walk past National Police main police station during a demonstration two days after the banned independence referendum in Barcelona, Spain, October 3, 2017. "Because (Catalonia) is going to lose more than (Spain) because businesses are fleeing from here already", said protester Juliana Prats, a Barcelona resident.
Spain's red-and-yellow flag has always been taboo here in Catalonia and throughout the country because it has been linked to groups supportive of Gen. Francisco Franco's dictatorship.
The police violence drew widespread condemnation and forced the government to issue an apology on Friday, although tensions continued to rise after reports of plans for the Catalan parliament to vote on a unilateral declaration of independence on Tuesday.
Wrapped in a Spanish flag, another local believes Prime Minister Rajoy should follow the rules and exercise his powers. "He is in charge of our government, he must do something".
Bartomeu explains. It is now pursing a strategy that says, either Catalonia gives in completely or it unilaterally declares independence.
On October 1, Catalonia held the independence referendum, which is not recognized by the Spanish authorities.
This led to accusations of hypocrisy voiced against the European Union, with Serbian President Aleksandar Vucic saying: "How come that in the case of Catalonia the referendum on independence is not valid, while in the case of Kosovo, secession [from Serbia in 2008] is allowed even without a referendum?" .
Another group called "Let's Talk" urged citizens to gather dressed in white in front of town halls, demanding dialogue to end the crisis under the slogan: "Spain is better than its leaders".
When asked if he had unleashed forces now beyond his control that could lead to civil unrest, and see Government MPs arrested and detained, Mr Mas said, "Well I hope this scenario won't happen in Catalonia".
The warnings by the business sector have coincided with the first calls from within Puigdemont's government to hold off on a declaration of independence.
There is no doubt the majority of the people do not want independence.
The demonstrator said it is hard to get hundreds of thousands of people out on the streets if a political party or major organization is not behind the call.