The Reserve Bank of India (RBI) governor announced the rate-setting panel's decision to raise the benchmark lending rate in an off-cycle move on May 5, following which at least two lenders, Bank of Baroda and ICICI Bank, upped their lending rates the next day.

The external benchmark lending rate at ICICI Bank has been hiked by 40 basis points to 8.10 percent. In addition, Bank of Baroda increased its repo-linked lending rate by 40 basis points to 6.90 percent.

On May 4, the monetary policy committee (MPC) increased lending rates by 40 basis points to 4.40 percent while also increasing the cash reserve ratio by 50 basis points. The MPC made the decision during an off-cycle meeting with the central board on May 2-4.

"The decision to hike the repo rate could be interpreted as a reversal of May 2020's rate move." We announced our accommodation withdrawal position last month. In his remarks, RBI Governor Shaktikanta Das remarked, "Today's action must be considered in the context of that action."

Analysts predict that other banks will follow suit and raise their lending rates in the coming days.

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