News7 October 2026By BlinkMoney Editorial

RBI Raises Repo Rate by 25 Basis Points to 5.50%, Its First Hike Since February 2023

The RBI's Monetary Policy Committee unanimously raised the repo rate to 5.50% from 5.25% on 7 October 2026 and shifted its stance to calibrated tightening, which points to higher floating-rate loan costs over the coming months.

The Reserve Bank of India's Monetary Policy Committee raised the repo rate by 25 basis points to 5.50% from 5.25% on Wednesday, 7 October 2026, in a unanimous vote. It is the first increase since February 2023. The committee also changed its policy stance to "calibrated tightening". For borrowers with floating-rate loans linked to the repo rate, the effect arrives at the next rate reset, not on announcement day.

As of the reporting cutoff of 10:50 India time on 7 October, this account rests on reports of the announcement by Business Standard, Upstox and Forbes India, which agree on the figures below. The RBI's own policy statement had not been reviewed for this article.

What the committee decided

Governor Sanjay Malhotra announced the decision at 10 am after the three-day meeting that began on 5 October. Reports of the announcement say all six members voted for the 25 basis point increase, and that four members backed the change in stance.

Calibrated tightening means the committee has taken rate cuts off the table for now and expects any further increases to be gradual and selective, not automatic at every meeting. Reports quote the Governor as saying that rate cuts are off the table in the near term, and that the next step could only be a hike or a pause, depending on how conditions develop.

The last increase before this one was on 8 February 2023, when the RBI raised the repo rate by 25 basis points to 6.50%. The repo rate had been 5.25% since the committee's cuts in 2025 and held there at the August 2026 meeting.

Inflation and growth forecasts

Reports say the RBI raised its consumer price inflation projection for 2026-27 to 5.2% from the 5.0% it projected in August, and raised its real GDP growth projection to 7.1% from 6.7%. Retail inflation was 4.82% in August 2026, according to the Ministry of Statistics and Programme Implementation, up from 4.45% in July and above the RBI's 4% medium-term target.

What it means for loans

Most new floating-rate retail loans are linked to an external benchmark such as the repo rate, and banks must reset them at least once every three months. A higher repo rate therefore reaches a borrower at the next quarterly reset date, plus any spread the lender added at sanction. Loans still on the older marginal cost of funds system adjust more slowly, and fixed-rate loans do not change during the fixed period.

Banks often keep the monthly EMI unchanged after a hike and extend the remaining tenure instead, unless that would breach the bank's tenure or age limit.

For scale, take a Rs 50 lakh loan with 25 years remaining. At 8.50% the EMI is about Rs 40,260. At 8.75%, after a 25 basis point increase passes through in full, it is about Rs 41,110, which is roughly Rs 850 more a month, or about Rs 2.5 lakh more interest over the full 25 years. These figures are an illustration with assumed rates. The actual effect depends on the lender's spread, the outstanding balance, the remaining tenure and the reset date.

Deposits

Fixed-deposit rates do not follow the repo rate mechanically. Banks set them from their own funding needs and competition for deposits, so any change reaches new deposits unevenly and with a delay. Existing deposits keep their contracted rate until maturity.

BlinkMoney Borrow

BlinkMoney's Borrow page states that its borrowing rate is linked to the RBI repo rate and advertises 9.99% a year, subject to the latest offer in the app, eligibility and applicable terms. BlinkMoney has not announced any change to that rate following the decision as of the cutoff. Borrowers should check the current in-app offer and agreement before borrowing.

What happens next

The committee's next scheduled meeting falls in December. Whether the 25 basis point move proves a one-off or the first of several will depend on inflation, crude oil prices and the rupee, which the committee has said it will keep watching.

This article is for general information only and does not constitute investment, tax, legal, or financial advice. Interest rates and policy decisions can change. Before borrowing or depositing, review the lender's current terms and consider speaking with a qualified financial adviser for advice specific to individual circumstances.

Sources and links

Source: Original source