RBI to announce repo rate decision on October 7; what it means for EMIs and FDs
The six-member Monetary Policy Committee meets from October 5 to 7, with the repo rate, now 5.25%, to be announced on the last day.
The Reserve Bank of India's six-member Monetary Policy Committee (MPC) will meet from October 5 to 7, 2026. The repo rate decision will be announced on October 7. The repo rate currently stands at 5.25%. With inflation pressure, crude oil prices and pressure on the rupee in view, borrowers and fixed deposit (FD) holders are watching the interest rate decision closely.
The repo rate is the rate at which the RBI lends money to banks for a short period. A change in it can affect banks' cost of raising funds, and banks may adjust their loan interest rates accordingly. A rise in the repo rate makes loans likely to become costlier, while a cut can bring some relief to floating-rate borrowers.
An example shows how much an EMI could rise if the repo rate goes up. Suppose the RBI raises the repo rate by 0.25%, or 25 basis points, and this feeds into loan interest rates. Take a Rs 50 lakh home loan for 20 years at 8.5% interest. The EMI at 8.5% works out to about Rs 43,391. If the rate rises to 8.75%, the EMI could be about Rs 44,186, or roughly Rs 795 more every month.
This is only an estimate based on an example. The actual change in the EMI will depend on the bank, the outstanding loan amount, the remaining tenure and how the loan's interest rate is set.
The impact is not limited to home loans. A rise in the repo rate may also affect some floating-rate personal loans and auto loans. For those currently paying EMIs, the RBI's October 7 decision is therefore important. A change in the repo rate generally has no direct effect on the current EMI of a loan with a fixed interest rate.
If the RBI makes no change and keeps the repo rate at 5.25%, loan interest rates need not change sharply right away. Nor will existing borrowers necessarily face an immediate extra burden on their EMIs. For FD holders too, the interest rate on an existing FD stays as fixed, so an unchanged repo rate has no direct effect on older FDs.
If the RBI surprises by cutting the repo rate, floating-rate borrowers could benefit. If the loan interest rate falls, the EMI could come down, or the loan tenure could shorten with the same EMI.
FD investors, however, could be affected the other way. After a repo rate cut, banks may lower FD interest rates going forward, so those making new FDs are likely to get lower returns than before.
Home loan customers, other borrowers and FD investors are therefore watching the RBI's repo rate decision on October 7, 2026. A clearer picture of the direction of EMIs and deposit interest will emerge only after the final decision.
