Policy and Rates
RBI raises repo rate by 25 basis points to 5.50% amid inflation risks
On Wednesday, October 7, 2026, the Reserve Bank of India raised the policy repo rate by 25 basis points to 5.50%, citing inflation risks. The decision does not by itself change any individual home loan rate or EMI, since that depends on how each lender passes it on.
| Decision date | Wednesday, October 7, 2026 |
|---|---|
| New policy repo rate | 5.50% (up 25 basis points) |
| Previous repo rate | 5.25%, held at the August 2026 policy review |
| Standing deposit facility rate | 5.25% |
| Marginal standing facility and Bank Rate | 5.75% |
| CPI inflation | 4.82% in August 2026 |
| GDP growth, Q1 FY27 | 7.8% |
| Rupee rate when reported | ₹96.36 per US dollar |
| Special forex swap facility (FCNR(B) deposits) | US$132.98 billion mobilised as of August 31 |
What the RBI decided
The Reserve Bank of India raised the policy repo rate by 25 basis points to 5.50% on Wednesday, October 7, 2026. The decision was made by the Monetary Policy Committee (MPC), the RBI body that sets the policy rate. According to ETRealty, the MPC voted unanimously for the increase.
The committee also shifted its policy stance from neutral to calibrated tightening. ETRealty reported that this shift was made by a majority. The standing deposit facility rate stood at 5.25%, and the marginal standing facility rate and Bank Rate stood at 5.75%.
RBI Governor Sanjay Malhotra said the MPC had voted unanimously to increase the policy repo rate by 25 basis points after assessing macroeconomic and financial conditions. The RBI had kept the repo rate at 5.25% at its August policy review.
Why the RBI acted
ETRealty reported that the hike was driven by strengthening inflation risks, elevated global yields and resilient domestic growth. The report gave the following figures and risk factors:
- CPI inflation was 4.82% in August.
- Inflation was projected to exceed 5% in FY27 and to peak at around 5.9% in the third quarter.
- Deficient monsoon conditions were cited as an inflation risk.
- Crude oil prices around US$100 a barrel were cited as an inflation risk.
- India's economy grew 7.8% in Q1 FY27.
The rupee was trading at ₹96.36 per US dollar when ETRealty filed its report. ETRealty also reported that the RBI's special forex swap facility had mobilised US$132.98 billion through FCNR(B) deposits as of August 31.
What it means for home buyers and borrowers
A higher repo rate can raise borrowing costs across the economy. It does not automatically or immediately change every home loan's interest rate or EMI. The effect on a floating-rate home loan depends on how the lender adjusts that loan, according to ET Edge Insights.
ET Edge Insights reported that higher borrowing costs could pressure affordability and near-term housing demand. Ramani Sastri, chairman and managing director of Sterling Developers, said the hike could raise buyers' acquisition costs and affect demand in the short term. These are reported assessments. They are not confirmed outcomes for home-loan rates, housing sales or festive-season demand.
Borrowers with floating-rate home loans should check with their lender how and when any change in the policy rate will be passed on to their interest rate and EMI.
What it means for investors and the market
For real estate investors, the decision signals that the RBI is tightening policy to address inflation rather than to support credit growth. Higher borrowing costs can affect buyer finance, developer financing costs and the pace of new launches. The reports used for this story describe these effects as possible, not certain.
What comes next
ETRealty reported that economists had earlier seen scope for cumulative tightening of up to 75 basis points and a repo rate around 6% by the end of FY27. That outlook was conditional on inflation, oil prices and global financial conditions.
The cited reports did not give a date for another rate decision or hike. The next steps will depend on how inflation, crude oil prices, the monsoon and global yields develop.
Frequently asked questions
What is the new repo rate in India?
The Reserve Bank of India raised the policy repo rate by 25 basis points to 5.50% on October 7, 2026. It had been 5.25% at the August 2026 policy review.
Does the repo rate hike change my home loan EMI immediately?
Not automatically. The rate decision does not establish that lenders will raise home-loan rates. For a floating-rate home loan, the effect depends on how the lender adjusts the loan and its terms.
Why did the RBI raise the repo rate?
According to ETRealty, the RBI cited strengthening inflation risks, elevated global yields and resilient domestic growth. Inflation was 4.82% in August, and deficient monsoon conditions and crude oil around US$100 a barrel were cited as risks.
Who decided the repo rate hike?
The decision was made by the Monetary Policy Committee of the Reserve Bank of India. RBI Governor Sanjay Malhotra announced that the committee voted unanimously to increase the rate by 25 basis points.
Could the repo rate rise further?
ETRealty reported that economists had earlier seen scope for cumulative tightening of up to 75 basis points and a repo rate around 6% by the end of FY27, conditional on inflation, oil prices and global conditions. No date for another decision was given in the cited report.
How might the hike affect property buyers?
ET Edge Insights reported that higher borrowing costs could pressure affordability and near-term housing demand. A developer, Sterling Developers' chairman Ramani Sastri, said the hike could raise buyers' acquisition costs and affect short-term demand. These are reported views, not confirmed outcomes.