RBI Raises Repo Rate 25 Basis Points to 5.50%: What It Means for Home Loan EMIs and FDs
The RBI raised its repo rate 25 bps to 5.50% on 7 October 2026. Floating-rate home loans are expected to cost more, and banks may lift FD rates gradually.
The Reserve Bank of India raised its policy repo rate by 25 basis points to 5.50% on 7 October 2026. The Monetary Policy Committee also changed the policy stance to "calibrated tightening". Business Today reports that this was the first increase in the repo rate since February 2023.
For households, the change reaches home loans and fixed deposits in different ways. Floating-rate borrowers are likely to face higher EMIs or longer loan tenures. Banks may gradually raise fixed deposit rates. This explainer sets out the RBI's figures, the worked examples Business Today published on 6 and 7 October, and the deposit rates Business Today reported on 6 October.
What the October 7 decision set
The repo rate is now 5.50%. The Standing Deposit Facility rate is 5.25%, and the Marginal Standing Facility rate and the Bank Rate are both 5.75%, according to the RBI's Monetary Policy Statement of 7 October 2026. The statement sets the stance at calibrated tightening.
For FY27, the RBI projects headline CPI inflation at 5.2% and core inflation at 4.4%, with real GDP growth at 7.1%. The quarterly CPI path is 4.9% in the second quarter, 6.0% in the third and 5.7% in the fourth. The statement's commentary separately expects headline CPI inflation to average almost 5.8% over the next three quarters. Real GDP growth is projected at 7.2%, 6.9% and 6.8% for the same three quarters.
The statement also gives a first-quarter projection for FY27-28: GDP growth of 7.1% and inflation of 5.6%. These are the outlook figures the RBI published with the decision.
How the hike reaches a floating-rate home loan
Business Today's October 7 piece works through a ₹50 lakh home loan taken for 25 years. At 7.5%, the EMI is about ₹37,000 a month. If the lending rate rises 25 basis points to 7.75%, the EMI becomes about ₹37,760.
The same article puts the monthly increase at about ₹810 and the extra interest over 25 years at about ₹2.4 lakh. Business Today's October 6 analysis uses the same loan and was published the day before the decision, when several experts expected a 25 basis point rise. It gives an EMI of ₹36,950 at 7.5% and ₹37,766 at 7.75%, a rise of ₹817 a month and ₹2.45 lakh of extra interest over the full tenure.
The two articles give slightly different figures for the same loan. Both assume the tenure remains unchanged.
Business Today says floating-rate borrowers are likely to face either higher EMIs or longer loan tenures. In the October 6 analysis, BankBazaar CEO Adhil Shetty describes the impact as "measured rather than disruptive", and Business Today says borrowers with repo-linked loans could see their rates reset within a few months.
On either set of figures, a 25 basis point change adds roughly ₹800 a month to the EMI on this loan, and the increase may show up as a higher EMI, a longer tenure or both, depending on the lender's reset mechanism.
The cuts that came before
Shetty, quoted in the October 7 piece, says this increase is only a fraction of the 125 basis points of cuts delivered earlier, so much of the earlier EMI relief remains in place.
Kumar Binit, CEO of airpay money, says the hike could put additional pressure on household budgets ahead of Diwali.
Shetty's comment places the 25 basis point increase against the 125 basis points of earlier cuts.
Floating-rate borrowers are likely to face higher EMIs or longer loan tenures.
How fixed deposit rates are moving
Business Today's October 6 analysis says existing fixed deposits continue to earn the rate at which they were booked until maturity. New deposits and renewals may benefit from higher rates.
The October 7 piece says banks may gradually offer higher rates. Its example uses a one-year deposit: if the rate rises from 7% to 7.25%, a ₹10 lakh deposit earns about ₹2,500 more a year before tax. The October 6 analysis says a ₹10 lakh FD booked after a 25 bps increase could potentially earn around ₹2,500 more in annual interest, before tax, if the bank passes on the full increase.
Business Today's October 6 analysis, citing BankBazaar data as of October 2, shows rates for 1–2-year deposits below ₹1 crore: 6.60% at Bank of Baroda, 7% at Yes Bank and up to 8.10% at Utkarsh Small Finance Bank.
What the figures mean for household budgets
For a floating-rate home loan, the examples show a higher monthly EMI with the tenure unchanged, and the lender's reset mechanism decides whether a rise shows up as a higher EMI, a longer tenure or both.
For savers, existing deposits keep their booked rate until maturity, and new deposits and renewals are where any higher rate would apply, according to the October 6 analysis.
The RBI's FY27 projections are 5.2% headline inflation and 7.1% real GDP growth. Business Today describes the October 7 move as the first repo rate increase since February 2023, so the examples above cover one 25 basis point step.
Readers should treat the rupee amounts as worked examples on a single loan amount and tenure, not as a quote from any lender.