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Why the RBI raised rates after a year of cutting
The repo rate went from 5.25% to 5.50%, the first hike since 2023. Here's what changed and what it means for your EMI.
On 7 October 2026, the RBI raised the repo rate from 5.25% to 5.50%. All six members of the Monetary Policy Committee voted yes. It was the first hike since 2023, and it came just ten months after the RBI's last cut.
What changed
Through 2025 the RBI cut rates four times, from 6.50% to 5.25%, to support growth. Then three things turned at once:
- OilCrude crossed $100 a barrel again. India imports most of its oil, so this feeds straight into prices.
- RupeeThe rupee slid close to its record low against the dollar, which makes imports costlier still.
- InflationThe RBI expects inflation to touch about 6% in October to December, the top of its 2–6% comfort band.
What the RBI signalled
The Governor's message was that the next move is another hike or a pause. Rate cuts are off the table for now.
EMIs on floating-rate home and car loans linked to the repo rate can rise slightly at the next reset. New fixed deposits should start paying a little more.
Repo rate, explained
The repo rate is the interest rate at which the RBI lends money to banks overnight. When it goes up, borrowing gets costlier for banks, and they pass that on to loans. It's the RBI's main tool to cool inflation.
Educational content only. Not investment advice. Spotted an error? Tell us.
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