What happened
RBI is expected to raise the repo rate 25 bp to 5.50% at the October MPC, its first rate hike since February 2023.
Why it matters
Home-loan and car-loan EMIs rise alongside the RBI's 1-trillion-rupee liquidity drain, cooling consumer credit demand.
Remember this
The RBI is about to break its four-year-long rate-cut streak.
More context & who is affected
The RBI is expected to raise the repo rate by 25 basis points to 5.50%, its first rate hike since February 2023. Bloomberg surveys put 35 of 41 economists behind the 25 bp move; Reuters' poll of 61 is split 35-to-25 with the balance holding steady.
Inflation is the trigger: CPI hit 4.82% in August, above the RBI's 4% target for a third straight month. Growth has held up, but the rupee has slipped to a record low of 96.38 per dollar and the Nifty 50 is in its longest losing streak in 25 years.
The RBI has already drained more than a trillion rupees of excess liquidity through bond sales and currency swaps, offsetting a flood of 133 billion dollars in FCNR(B) deposits. A hike would cement that tightening turn at the policy-rate dial.
- Repo rate after hike
- 5.50% Current 5.25% plus an expected 25 bp hikeNDTVTimes of India
- August inflation
- 4.82% Third month above the RBI's 4% targetTimes of IndiaNDTV
- Rupee per dollar
- 96.38 Near a record lowNDTV
Why the pivot
Inflation above target, a weakening rupee and record foreign outflows have pushed the RBI's liquidity toolkit to its limit. A repo hike is the next lever.
Homebuyers
Home-loan and car-loan EMIs likely to rise once the repo rate reaches 5.50%.
Business Executives · Sme Owners
Corporate borrowing costs rise alongside the RBI's ongoing 1-trillion-rupee liquidity drain.
General Public · Importers
Rising yields partly cushion the rupee at a near-record low of 96.38 per dollar.
Story updates 1
Key developments (1)
Follow-up events appended to this developing story
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RBI MPC verdict arrives Wednesday 10 am; Union Bank of India sees repo at 6%
ET: MP statement 10 am, press conference noon; Union Bank of India sees repo up to 6% by end of FY27.
Source: The Economic Times
Reporting fromNDTV ↗Times of India ↗
Sources & verification2 sources · 4 claims
These are the records behind this briefing. Linked reporting is not the same as independent confirmation.
- NDTVReporting
India Set For First Repo Rate Hike in Almost Four Years: Report ↗
Published Oct 5, 2026 · Accessed Oct 6, 2026 - Times of IndiaReporting
RBI may end rate-cut cycle with first hike since February 2023 ↗
Published Oct 5, 2026 · Accessed Oct 6, 2026
Claims and linked sources
RBI is expected to raise the repo rate 25 bp to 5.50%, its first hike since February 2023.
35 of 41 Bloomberg economists back a 25 bp hike; 35 of 61 Reuters respondents expect up to 70 bp.
Consumer inflation rose to 4.82% in August, above the RBI's 4% target for a third straight month.
The rupee traded near a record low of 96.38 per dollar and 10-year yields hit a 2.5-year high.
