The RBI raised rates for the first time since 2023. Here is what changes for you

On 7 October the Reserve Bank of India's Monetary Policy Committee raised the repo rate by 0.25 percentage points to 5.50%. It is the first increase since February 2023. The RBI also changed its stance to "calibrated tightening", which means it is prepared to raise rates further, in measured steps, if inflation demands it.

Why the RBI moved

Inflation has been creeping up. Consumer price inflation rose to 4.8% in August, and the RBI now expects 5.2% for 2026-27. At the same time it expects the economy to grow a healthy 7.1%, which gives it room to tighten without choking growth.

Your loans

Most new floating-rate home loans are linked to the repo rate. When it rises, banks reset the loan rate at the next reset date, so your EMI or your loan tenure goes up. Fixed-rate loans do not change.

Your fixed deposits

Banks tend to raise deposit rates after a hike, often with a lag. If you are about to book a long fixed deposit, it can be worth checking whether rates are still moving up.

Your debt funds

Bond prices move opposite to interest rates. When rates rise, existing bonds lose some value, and funds holding long-dated bonds feel it most. Liquid, money market and short-duration funds are less affected and start earning more as rates rise. Matching the fund's duration to how long you will stay invested matters more now.

What to watch

The minutes of the October meeting come out on 21 October and will show how strongly members feel about further hikes. The next policy meeting is on 2 to 4 December.