RBI Policy October 2026: 8 of 10 Economists Expect First Repo Rate Hike Since 2023, to 5.50%, on 7 October
Eight of 10 economists polled by Business Standard expect the Reserve Bank of India to raise the repo rate by 25 basis points, from 5.25% to 5.50%, when its Monetary Policy Committee (MPC) announces the RBI policy October 2026 decision on Wednesday, 7 October. The poll, published on 2 October, comes after retail inflation rose to 4.82% in August. If the MPC goes ahead, it would be the first repo rate hike since February 2023.
The repo rate has been held at 5.25% for the last four policy reviews, after cumulative cuts of 125 basis points in 2025, Business Standard noted. The MPC meets from 5 to 7 October, and the RBI policy October 2026 statement will also carry fresh growth and inflation forecasts.
RBI MPC meeting dates and current rates
The RBI published the MPC schedule for 2026-27 in March. The October meeting is the fourth of six this financial year, according to the RBI’s press release on the MPC meeting schedule.
| RBI MPC meeting | Dates | Status |
|---|---|---|
| Fourth meeting of 2026-27 | 5, 6 and 7 October 2026 | Decision on 7 October |
| Fifth meeting | 2, 3 and 4 December 2026 | Scheduled |
| Sixth meeting | 3, 4 and 5 February 2027 | Scheduled |
The RBI’s website shows the policy repo rate at 5.25%, the standing deposit facility rate at 5.00%, and the marginal standing facility rate and Bank Rate at 5.50%. At the August meeting the six members, chaired by Governor Sanjay Malhotra, voted unanimously to keep the repo rate unchanged and retained a neutral stance, the minutes show.
What do economists expect from the RBI policy October 2026?
Most forecasters now see a hike. In the Business Standard poll, Barclays economists Aastha Gudwani and Amruta Ghare said they expect a first increase on 7 October because domestic inflation faces upside risks from oil prices while growth has stayed resilient. They see the repo rate peaking at 5.75%.
A separate Reuters poll, conducted from 18 to 28 September and carried by Mint, found 35 of 61 economists expecting a 25-basis-point repo rate hike to 5.50% in October. A slim majority in that poll, 29 of 53, expected at least one more increase by December.
| Poll | Expect a 25 bps hike on 7 October | Other views |
|---|---|---|
| Business Standard (published 2 October) | 8 of 10 | Bank of Baroda’s Madan Sabnavis expects a hold |
| Reuters (18–28 September) | 35 of 61 | 29 of 53 see another hike by December |
Bank of Baroda’s Madan Sabnavis was the only Business Standard respondent who said the MPC would keep rates unchanged. He argued that a hike just before the festival season would do little to improve transmission to deposit rates, especially with inflows under the FCNR(B) scheme. “They can wait for one more policy,” he said.
Why the debate has shifted
Poll respondents and other forecasters point to the following pressures:
- CPI inflation was 4.82% in August, up from 4.45% in July, according to the MoSPI press release for August 2026 (PDF). Food inflation was 5.95%.
- Crude oil has stayed above $100 a barrel in recent weeks. ICRA’s Aditi Nayar told Business Standard that petrol and diesel prices may need to rise by as much as ₹8–9 a litre at current crude prices, a point covered in our report on a possible petrol and diesel price hike. She called a pre-emptive hike in October appropriate, with another in December depending on prices.
- The rupee fell to 96.31 per dollar on 1 October, a two-month low (PTI). Reuters noted that the RBI is under pressure to support its defence of the currency with a rate increase; the currency moves are tracked in our dollar to rupee report.
IDFC First Bank’s Gaura Sen Gupta expects CPI inflation to average 5.2% in 2026-27, marginally above the RBI’s 5.0% projection from August. Growth is also stronger than the RBI had forecast: GDP grew 7.8% in April–June, 80 basis points above the central bank’s projection, and most poll respondents expect the 6.7% growth forecast for 2026-27 to be raised.
Repo rate hike: what it would mean for loans
If the RBI policy October 2026 decision does bring a hike, borrowers will feel it through their loan’s benchmark. Home loans and many other retail loans are linked to an external benchmark, usually the repo rate, and the RBI’s rules require the rate on such loans to be reset at least once every three months. A 25-basis-point increase in the repo rate would typically pass through to these loans at the next reset date. Loans linked to a bank’s MCLR adjust more slowly.
| Home loan (20 years) | EMI at 7.50% | EMI at 7.75% | Extra each month |
|---|---|---|---|
| ₹30 lakh | ₹24,168 | ₹24,628 | ₹460 |
| ₹50 lakh | ₹40,280 | ₹41,047 | ₹767 |
EMIs are our calculation using the standard reducing-balance formula, assuming the full 25 bps is passed on. Many banks extend the tenure instead of raising the EMI when rates rise. Our explainer on the home loan EMI after an RBI rate hike covers ₹75 lakh loans and the tenure option.
And for fixed deposits?
Deposit rates usually follow policy rate hikes with a lag, and banks decide their own FD rates. Sabnavis’s comment in the poll suggests that the pass-through to deposits may be limited in the near term. The RBI’s homepage currently shows term deposit rates above one year in a range of 6.00% to 6.75%. Small savings rates for October–December were left unchanged on 30 September, as reported in our post office interest rates report, so the RBI policy October 2026 outcome would not change them before January.
Liquidity and stance
Markets will also watch the RBI’s liquidity strategy in the RBI policy October 2026 announcement, Business Standard noted. Barclays said system liquidity was in a surplus of 1.8% of net demand and time liabilities, with the weighted average call rate at 5.1%, below the repo rate, as of 28 September. It expects the RBI to keep absorbing liquidity through variable rate reverse repos, open market bond sales and swaps. Most respondents also expect the RBI to raise its 2026-27 inflation forecast from 5%, by anywhere from 10–20 basis points to more, while keeping the neutral stance unchanged.
FAQ: RBI policy October 2026
When will the RBI announce its October 2026 policy?
On Wednesday, 7 October, at the end of the MPC meeting that starts on 5 October.
What is the current repo rate?
5.25%. It has been unchanged for four reviews.
How many economists expect a hike?
Eight of 10 in the Business Standard poll and 35 of 61 in the Reuters poll expect a 25-basis-point increase to 5.50%. Full poll responses are in the Business Standard poll report.
When did the RBI last raise rates?
In February 2023, when it increased the repo rate by 25 basis points to 6.5%.
Disclaimer: Poll figures are as published by Business Standard and Reuters (via Mint), and rates are from the RBI website on 2 October 2026. The actual MPC decision may differ from these expectations.
