Bankers surprised at timing of RBI rate hikes

MUMBAI: Bankers said that while the rate hikes effected by the Reserve Bank today were expected, they were just a little surprised at the timing since the action comes just a few weeks before the monetary policy review scheduled for July 27.

"The rate hikes were expected but the timing comes as a little bit of surprise," State Bank of India's CFO, S S Ranjan told PTI here today.

It is too early to say whether deposit and lending rates would go up, he added.

The Reserve Bank today hiked both its repo and reverse repo rates by 0.25 per cent each to 5.50 per cent and 4 per cent, respectively, with immediate effect.

The action was aimed at tackling inflation now in double-digits and to anchor inflationary expectations going forward, the Apex bank said in a statement.

While just a trifle surprised at the timing, HDFC Bank's Treasury Head, Ashish Parthasarathy, said that he did not expect any immediate increase in banks' deposit and lending rates.

"I see no immediate change in deposit and lending rates -- banks will look at their liquidity situation...any change could happen after a couple of months," Parthasarathy said.

Citibank's CFO, Abhijit Sen, said that the RBI action was aimed to keep inflation under check, especially after the oil price deregulation.