On October 7, 2026, at 10 am, RBI Governor Sanjay Malhotra will step up to announce a decision that could change the monthly budget for millions of Indian households. The Reserve Bank of India's six member Monetary Policy Committee is completing a three day meeting that began on October 5. For four straight policy reviews, the committee held the repo rate steady at 5.25%. This time, a majority of economists expect that pause to end.
Why this repo rate meeting matters
The Reserve Bank of India's six-member Monetary Policy Committee is meeting from October 5 to 7 to review economic conditions and determine the next course of monetary policy, with the decision scheduled for October 7. Governor Sanjay Malhotra is scheduled to announce the committee's decision at 10 am, followed by a press conference at noon. The RBI has kept the repo rate unchanged at 5.25% for the last four consecutive policy meetings, after cutting it by a cumulative 125 basis points in 2025. That long pause is now in question.
Rising inflation, higher energy prices and rate hikes by several major global central banks have strengthened expectations that the RBI may shift towards a tighter monetary policy stance in October. Economists expect the RBI could consider a 25 basis point increase in the repo rate, taking it to 5.50%. Investors are closely tracking the possibility of a repo rate hike, which would be the first such increase since February 2023. A single number, decided in one room, would ripple through loan accounts across the country within weeks.
Sugandha Sachdeva, founder of SS WealthStreet, framed the likely outcome plainly. She said "the base case for the upcoming MPC meeting is a 25-basis-point hike in the repo rate, as inflationary pressures have strengthened while domestic economic growth remains resilient." A wider poll backs that view. A Business Standard poll found the MPC is expected to start raising interest rates with a 25 basis point increase, and eight of the 10 respondents surveyed expect a rate hike.
Who feels a rate hike first
Not every borrower feels a repo rate move at the same speed. Repo-linked loans adjust fastest, with EMIs rising or falling within one to three months after a rate change. Repo-linked home loans reset quickly when the repo rate changes, affecting EMIs faster than older benchmark loans. Borrowers still on MCLR contracts, set by individual banks on their own review cycles, typically see the change arrive later and in smaller steps.
Home loan EMI outcomes depend on whether the loan is linked to EBLR, MCLR or a fixed rate. Someone who took a floating loan during the 2025 rate cuts is now the person most exposed to a reversal. Fixed deposit holders sit on the other side of the same decision: a higher repo rate generally lifts the deposit rates banks offer on new fixed deposits, even as it raises the cost of new loans.
What the EMI numbers show
Analysts have already run the math on a typical loan. On a ₹50 lakh home loan at 7.5% for 25 years, the EMI of about ₹36,950 could rise by roughly ₹817 a month following a 25-bps increase. This would take the EMI to around ₹37,766, assuming the entire rate increase is passed on to the borrower and the tenure remains unchanged. For a borrower carrying a larger loan, the added monthly outgo would scale up proportionally.
Context matters here. The RBI cut the repo rate four times in 2025, delivering a total reduction of 125 basis points, from 6.50% to 5.25%. A single 25 basis point reversal would claw back only a fifth of that relief, but it would still mark a real shift in direction for borrowers who had grown used to falling EMIs.
Some analysts expect the central bank to pair any hike with liquidity measures. Abhishek Bisen, head of fixed income at Kotak Mahindra AMC, has pointed to durable liquidity absorption of close to ₹1 lakh crore alongside the rate move, with cumulative tightening of 50 to 75 basis points expected over the next 12 to 15 months depending on how inflation and the currency behave.
What comes after October 7
The decision on October 7 may not be the last word on this cycle. The MPC faces a difficult choice, as elevated crude oil prices, hardening bond yields and pressure on the rupee raise the cost of keeping interest rates unchanged, according to JM Financial. The brokerage expects a shallow rate hike cycle, most likely beginning in October, although the choice between an October and December move remains finely balanced.
The timing will depend largely on whether crude oil prices remain elevated and whether the Fed raises rates again in October. Markets are already bracing for RBI action, and the rising cost of holding rates may make an October frontloaded hike the more likely outcome. Whether the committee moves now or waits for its December review, the next bi-monthly meeting will tell borrowers if October 7 was the start of a longer tightening cycle or a single, isolated adjustment.
Learn more about repo rate
- RBI MPC October 2026: Key Things To Know Ahead Of Policy Decision
- RBI MPC October 2026 meeting: When and where to watch rate decision live
- RBI repo rate hike: What happens to your home loan EMI and FD returns if rates rise 25 bps?
