Bankers feel interest rates could rise but not immediately

MUMBAI: Bankers today said that the Reserve Bank's 0.25 per cent hike in repo and reverse repo rates could push interest rates higher but may not immediately trigger a rate rise.

They also said that while the RBI action was expected, it had come "slightly earlier than expected" and was aimed at anchoring inflationary expectations.

The apex bank in a late-evening move, hiked both the repo and reverse repo rates by 0.25 per cent each with immediate effect to 5 per cent and 3.5 per cent, respectively.

"A rate hike was expected to anchor inflationary expectations and so the hike by itself is not surprising- however the timing is a bit of a surprise as most expected it to happen in April," HDFC Bank's Head-Treasury, Ashish Parthasarathy, told PTI here today.

He, however, did not expect an immediate rise in interest rates.

Standard Chartered's Country Head, Neeraj Swaroop, described the rate hike as "primarily a signal. The move will definitely help the RBI's efforts to arrest inflation," The apex bank has signalled a tigher monetary regime as well as its intention to combat inflation."