RBI raised the repo rate to 5.50%. What it means for your loans, FDs and debt funds
On 7 October 2026 the RBI raised rates for the first time in nearly four years and moved to a tightening stance. Here is what a 0.25 point rise does to a large loan, a new FD and a bond fund.
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The Monetary Policy Committee raised the repo rate from 5.25% to 5.50% on 7 October 2026. In 2025 the RBI had cut rates by a total of 1.25 points, from 6.5% to 5.25%, and held there for four meetings. The new stance, calibrated tightening, signals that further rises are possible. The next meeting is on 2 to 4 December 2026.
| Rate | Now |
|---|---|
| Repo rate | 5.50% |
| Standing deposit facility (SDF) | 5.25% |
| Marginal standing facility (MSF) and Bank Rate | 5.75% |
The RBI projects CPI inflation for 2026-27 at 5.2% and real GDP growth at 7.1%. Oil above $100 a barrel adds to inflation risk.
Loans: floating rates move first
At least five banks raised their lending benchmarks from 8 October. Most home loans in India are linked to the repo rate, so they reset at the next reset date in the loan agreement.
| ₹1 crore home loan, 20 years | Rate | EMI |
|---|---|---|
| Before | 8.00% | ₹83,644 |
| After a 0.25 point rise | 8.25% | ₹85,207 |
That is about ₹1,563 more a month. Many banks keep the EMI the same and lengthen the tenure instead, which costs more in total interest; your loan statement shows which they chose.
Fixed deposits: new money, not old
Existing FDs keep the rate they were opened at. New deposits may start paying more if banks pass the rise on. On ₹1 crore, a rate 0.25 point higher is ₹25,000 more interest a year, taxed at your slab.
Debt funds: duration decides the hit
When rates rise, bond prices fall. A rough guide is the fund’s modified duration multiplied by the change in yield.
| Fund’s duration | Yields rise 0.25 point | Rough price change |
|---|---|---|
| 2 years | 0.25 point | about −0.5% |
| 7 years | 0.25 point | about −1.75% |
The fund’s monthly factsheet lists its duration. Higher yields also mean the fund earns more on new bonds it buys, so the fall is recovered faster than in a fixed-rate instrument.
What to check this month
- Your loan’s reset date and whether the bank raises the EMI or the tenure.
- The duration of each debt fund you hold, from its factsheet.
- Where new cash is parked: savings account, sweep FD, liquid fund or arbitrage fund each respond to rate changes differently.
Questions
- What is the repo rate now?
- 5.50%, after the RBI raised it by 0.25 point on 7 October 2026. The SDF rate is 5.25% and the MSF rate and Bank Rate are 5.75%.
- How much will my home loan EMI rise?
- On a ₹1 crore, 20-year loan at 8%, a 0.25 point rise lifts the EMI from ₹83,644 to ₹85,207, about ₹1,563 a month, from the loan’s next reset date. Some banks lengthen the tenure instead.
- Do existing fixed deposits get the higher rate?
- No. Existing FDs keep the rate they were opened at; only new deposits can pay more.
- How do rate rises affect debt funds?
- Bond prices fall when yields rise. A rough estimate is duration times the change in yield: a fund with a 7-year duration falls about 1.75% if yields rise 0.25 point.
- When is the next RBI policy meeting?
- 2 to 4 December 2026.
Sources
- Forbes India: RBI raises repo rate to 5.5%
- Corplaw Updates: RBI hikes repo rate by 25 bps to 5.50%, October 2026
- Paise Samjho: Repo 5.50%, banks raise rates from 8 Oct
Compound is analysis, not investment advice. Reva Money is not a SEBI-registered investment adviser.
