Growing concerns over runaway inflation and signs of stable economic recovery may prompt the

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Reserve Bank to hike its key short-term lending and borrowing rates by up to 0.50 per cent in its annual monetary policy on April 20, top bankers said today.

The apex bank, which began unwinding its monetary stimulus by upping the Cash Reserve Ratio (banks' portion of deposits with the RBI) by 0.75 per cent in January and policy rates by 0.25 per cent in March, is set to tighten the policy stance further to fight inflation -- presently hovering beyond its comfort zone, they said.

Ballooning prices of milk, fruits and pulses pushed up food inflation to 17.70 per cent for the week ended March 27 while the overall inflation that includes variation in prices of food and non-food items, presently stands at 9.89 per cent.

But banks are unlikely to hike their lending rates in the immediate future unless the quantum of increase in RBI's key-rates is significant enough to force them pass on the cost burden to the customer, Oriental Bank of Commerce's Chairman and Managing Director T Y Prabhu said.

"RBI is likely to hike the rates by anywhere between 0.25-0.5 per cent as the inflation situation warrants monetary action. I do not expect lending rates to go up immediately as the liquidity in the system is enough to absorb even a 0.25 per cent rise in key-rates," Prabhu said.