RBI MPC Decision: Repo Rate Hiked to 5.50%, Banks Raise Lending Rates From 8 October

The repo rate is now 5.50%. On Wednesday 7 October, the Monetary Policy Committee voted 6–0 to raise it by 25 basis points and switched its stance from neutral to “calibrated tightening”. Within hours of the RBI MPC decision, at least five banks announced higher lending benchmarks effective today, Thursday 8 October.

Here is what the policy statement says, which banks have moved so far, and how your loan responds.

RBI MPC decision: the numbers in the 7 October resolution

All of these figures come from the MPC resolution (press release 2026-2027/1264), issued after the committee’s 63rd meeting on 5–7 October.

The “before” column subtracts 25 bps, because each rate moved by exactly the size of the hike. Paragraph 8 records August CPI inflation at 4.8%, up from 4.5% in July. Paragraph 11 expects headline inflation to “average almost 5.8 per cent in the next three quarters”. The average of the three quarterly projections in para 9 (6.0%, 5.7% and 5.6%) is 5.77%.

What “calibrated tightening” tells borrowers

Paragraph 14 gives the plain-language meaning: the stance “only signals that given the current conditions, rate cuts are off the table in the near term and policy action ahead can only be a rate hike or a pause”. The vote on the rate was unanimous, but the vote on the stance was not. Paragraph 15 records that Dr. Nagesh Kumar and Prof. Ram Singh wanted to keep it neutral.

For borrowers, the practical reading of the RBI MPC decision is this: anyone hoping for a cut at the next meeting, on 2–4 December (para 18), has been told not to expect one. The minutes come out on 21 October (para 17) and will show how each member argued.

Banks that have raised lending rates from 8 October

The banks’ announcements reached the public through wire and news reports on Wednesday evening. When we checked PNB’s own retail-rates page at about 2:50 AM IST on Thursday, it still showed the old “presently” rates, so the table below relies on those reports (PTI via Free Press Journal and CNBC-TV18).

Each of them passed on the full 25 bps. The same reports put Bank of India and Indian Overseas Bank at 8.35%, and CNBC-TV18 reported Bank of India’s change effective 7 October. Check your own bank’s website or your loan account statement before relying on any of these figures.

When your EMI actually changes

A higher benchmark does not raise your EMI overnight. Under RBI’s Interest Rates on Advances Directions, external-benchmark loans have to be reset at least once every three months. Your loan agreement fixes the reset date, so the new rate applies from your next reset, not from today. Loans linked to MCLR follow their own reset cycle, which can be up to a year.

When the reset comes, in practice banks usually keep the EMI the same and stretch the tenure. Here is what that does, using the same horizon for both choices:

Keeping the EMI unchanged costs about ₹2 lakh more in interest than paying ₹617 a month extra. If your bank stretches the tenure by default, you can usually ask it in writing to raise the EMI instead. Our earlier pieces on the EMI impact of a 25 bps repo hike and on home-loan EMIs after an RBI hike have tables for other loan sizes. A part-prepayment is the other lever; see our home loan prepayment rules.

What about fixed deposits?

The RBI MPC decision does not set deposit rates, and no bank’s FD revision had been confirmed in the reports we reviewed. The Governor’s statement noted that average deposit rates had been easing until now. Banks often raise FD rates after lending rates, but how far and when is up to each bank. Our guide to RBI’s FD rules for 2026 covers what a depositor can and cannot change on an existing FD.

Still unclear: the date your own loan resets, and any FD moves, which banks had not yet announced when this was written.

The rest of this piece answers the questions borrowers are asking this morning.

FAQ

Will my home loan rate go up today?

Your bank’s benchmark may change today, but your loan’s rate changes on its next reset date. Look for “reset” in your sanction letter.

Was the vote split?

On the rate, no: the vote was unanimous. On the stance it split 4–2, with two members preferring to stay neutral (para 15).

Can RBI cut rates in December?

The statement says cuts are “off the table in the near term”. The next decision is due on 4 December, the last day of the 2–4 December meeting.

Does the hike affect my existing fixed-rate car loan?

A genuinely fixed-rate loan keeps its agreed rate. Check whether the agreement allows any reset.

Takeaway: look up your loan’s next reset date this week, and decide before it arrives whether you want a higher EMI or a longer tenure.