The Chairman and Managing Director, Canara Bank, Mr S. Raman, said RBI has to do a balancing act between curtailing inflation and growth.

With inflation moving up, the hike of 25 basis points by RBI was on expected lines.

The bank is seriously considering raising rates as soon as possible, he said.

Currently, Canara Bank's base rate is at 10 per cent.

Drive to contain inflation

The Chairman and Managing Director, Vijaya Bank, Mr H.S. Upendra Kamath, said the move by the banking regulator was inevitable with headline inflation.

The objective of raising the rates is largely driven with the objective of containing inflation.

Asked whether the bank would raise its rates, Mr Kamath said that it was too premature to talk about it.

“Currently, we have not taken a decision, our asset liability meeting will meet at the appropriate time and decide whether to raise rates or not,” he said. Vijaya Bank's base rate is at 10 per cent.

Spread on Govt bonds flat

The Executive Director, Indian Bank, Mr V. Rama Gopal, said the spread on governments bonds have been flat.

The ten-year government securities are going at a rate of 8.30 per cent while one-year treasury bills are at 8.34 per cent.

The market has already factored in 25 basis points hike.

“The bank will take a decision on raising rates after observing the impact of the hike for the next two days,” he said.

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