Saikat DasThe Reserve Bank of India's (RBI) mid-quarter policy might have led bankers to believe that the regulator would hike key interest rates by another 50-75 basis points in 2011 to tame inflation. In light of this, banks too are bracing up for another round of lending rate hikes, if not deposit rates."We may hike our lending rates by 25 bps by the end of June," M Narendra, CMD, Indian Overseas Bank told Moneycontrol.com."Banks would have paused hiking rates if RBI had indicated any moderation in the rate of inflation, despite 25 bps hike in policy rates. However, RBI has hinted to continue with its anti-inflationary stance. So, there has to be some transmission of rates to customers."Bankers, however, believe that good monsoons coupled with a moderation in the manufacturing sector will help cool down inflation. Till inflation comes down to 7-7.5%, RBI will continue to hike rates, they said.Domestic inflation risks remain high. Against this backdrop, the monetary policy stance remains firmly anti-inflationary, recognising that in the current circumstances, some short-run deceleration in growth may be unavoidable in bringing inflation under control, says the RBI policy document."RBI rate hike is consequential," said Jagdish Pai, executive director at Canara Bank. "We are holding an asset liability committee (ALCO) meeting today to decide on rate hikes. We will consider the cost of funds in the wake of the recent rate hikes. However, we may not hike deposit rates barring some tweaking in short-term maturities."The incremental non-food credit-deposit ratio moderated to 80.5% year-on-year in early June, 2011 from 95.3% in March, 2011. The non-food credit growth fell to 20.6% from 21.3% during same period. This moderation is in line with RBI's intention."We will closely watch the cost of funds and credit demand. If we see both the factors moving up, we may revise our lending rates accordingly," RK Bakshi, executive director, Bank of Baroda told Moneycontrol.com.With the latest increase of 25 bps in repo and reverse repo rates, RBI has so far hiked 250 bps in policy rates since April 2010.Here is what M&M has to say.