RBI raises repo rate to 5.5% on 7 October 2026: will your home loan EMI go up?

The decision (7 October 2026)

• Repo rate: up 0.25 percentage point to 5.50% (from 5.25%). The MPC voted 6-0 for the hike, its first since February 2023.
• Stance: changed to "calibrated tightening" by a 4-2 vote. In plain words: rate cuts are off the table for now, and further moves depend on the data.
• Other rates: the Standing Deposit Facility is now 5.25%; the Marginal Standing Facility and Bank Rate are 5.75%.
• Why: Governor Sanjay Malhotra said food price increases "had become more broad-based," citing items such as sugar and onions. Retail inflation was 4.8% in August, and the RBI now sees it averaging about 5.8% over the next three quarters.
• Growth: GDP growth for this financial year is forecast at 7.1%.

What it means for you

• Floating-rate loans linked to the repo rate: your rate will usually rise at the next reset, typically within about three months. As an example, a ₹50 lakh, 20-year home loan going from 8.50% to 8.75% means about ₹795 more a month (₹43,391 → ₹44,186). Some banks extend the tenure instead of raising the EMI. Your actual change depends on your bank, spread and remaining tenure.
• Fixed-rate loans: no change.
• Fixed deposits: banks may raise FD rates over the coming weeks, but it isn't automatic or immediate.
• More hikes? Several economists (SBI Research, Crisil, Nomura, HSBC) had expected another 0.25-point hike in December. The new stance keeps that possibility open.

How we got here

Before the meeting, 8 of 10 economists in a Business Standard poll expected this hike. The pressures: inflation rising (4.82% in August), crude oil near $100 a barrel, a 12% rainfall deficit, a weak rupee (around 96.45 to the dollar on the day) and US bond yields near 24-year highs.

This post summarises the RBI's decision and economists' views and is not financial advice.

Over to you

• If you have a home or car loan, will you prepay, switch lenders, or wait?
• Are you booking an FD now, or waiting to see if rates rise further?
• Was the RBI right to hike now to fight inflation, or should it have waited until after Diwali?

Updated 7 October 2026 with the RBI's decision.