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Banks may not immediately pass on the 25 basis points hike effected by the RBI today. Senior bankers say they may keep their lending rates at current levels for the immediate future. Lending rates have already gone up by about 250 basis points during the past one year.
Banks may hold off another hike because the first quarter (April to June) is traditionally a lean quarter for business.
Banks did increase their deposit and lending rates during February and March this year.
The RBI said that the year-on-year non-food credit growth moderated from 21.3 per cent in March 2011 to 20.6 per cent in early June 2011, while deposit growth rose to 18.2 per cent from 17 per cent in the same period.
It noted that while the higher cost of credit is restraining credit growth, it still remains fairly high, suggesting that economic activity is holding course.
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