{"id":1091645,"date":"2026-10-07T13:01:23","date_gmt":"2026-10-07T07:31:23","guid":{"rendered":"https:\/\/www.squareyards.com\/blog\/?p=1091645"},"modified":"2026-10-07T13:35:38","modified_gmt":"2026-10-07T08:05:38","slug":"rbi-repo-rate-hike-5-5-percent-inflation","status":"publish","type":"post","link":"https:\/\/www.squareyards.com\/blog\/rbi-repo-rate-hike-5-5-percent-inflation","title":{"rendered":"Repo rate raised to 5.5% as RBI sees rising inflation risks"},"content":{"rendered":"

The RBI has raised the policy repo rate by 25 basis points to 5.5% following the Monetary Policy Committee (MPC) meeting held from October 5 to 7. In <\/span>today\u2019s repo rate<\/span> decision, the MPC unanimously approved the hike and decided to keep a tighter policy to control rising inflation and deal with global uncertainty. The decision comes as food and fuel prices have increased and international crude oil prices have become more volatile amid the escalation of the West Asia conflict. An <\/span>RBI repo rate cut<\/span> is off the table in the near term, leaving the possibility of another hike or a pause depending on how inflation and economic conditions develop.<\/span><\/p>\n

Repo rate hiked amid inflation concerns<\/strong><\/h2>\n

The <\/span>current RBI repo rate<\/span> hike was driven by concerns that inflation is spreading after remaining relatively under control last year. Retail inflation rose to 4.8% in August from 4.5% in July, with higher food and fuel prices contributing to the increase. Food price pressures have also spread across several items, while core inflation has started to rise.<\/span><\/p>\n

The RBI expects these pressures to continue in the near term. An uneven monsoon, El Nino conditions and volatility in international oil prices could keep supply-side inflation elevated. The escalation of the West Asia conflict has affected crude oil prices and financial markets. Higher global bond yields, trade uncertainty and tighter financial conditions have increased risks for the economic outlook. The <\/span>present RBI repo rate<\/span> hike was needed to control inflation and prevent temporary price pressures from spreading further.\u00a0<\/span><\/p>\n

Despite these pressures, domestic economic activity remains resilient. Real GDP growth was 7.8% in the first quarter, supported by private consumption and investment. This gives the central bank room to focus more closely on inflation without responding to a sharp slowdown in economic activity.<\/span><\/p>\n

While announcing the <\/span>current repo rate, RBI<\/span> Governor Sanjay Malhotra stated, \u201cGrowth was driven by resilient private consumption and strong investment activity, while contribution of net exports also remained positive. Looking ahead, global economic uncertainty and supply chain disruptions are expected to have some bearing on domestic economic activity.\u201d<\/span><\/p>\n

Homebuyers to face higher borrowing costs<\/strong><\/h2>\n

The <\/span>repo rate increase<\/span> is likely to put upward pressure on home loan interest rates, particularly for floating-rate borrowers whose loans are linked to external benchmarks. Lenders may raise their home loan rates, increasing borrowing costs for new and existing home loan borrowers.\u00a0<\/span><\/p>\n

For prospective homebuyers, a higher lending rate means a larger EMI for the same loan amount or a longer repayment period if the borrower wants to keep the EMI unchanged. This could affect the loan amount that buyers can comfortably take and, in turn, their property budget. Existing floating-rate borrowers could also see their interest rates and EMIs rise as lenders pass on the <\/span>repo rate change<\/span>.\u00a0<\/span><\/p>\n

Mr. Pradeep Aggarwal, Founder and Chairman, Signature Global (India) Ltd, <\/i><\/strong>says, \u201cWhile housing demand has stayed resilient even through global uncertainty, volatile crude prices, currency pressures and persistent inflation risks have made the central bank’s task a delicate one. That said, a stable repo rate would have better sustained the current demand momentum. Higher borrowing costs may temporarily moderate buyer sentiment. Still, with strong fundamentals and the upcoming festive season, we expect the sector to remain resilient.\u201d<\/span><\/p>\n

The central bank said that rate cuts are unlikely in the near term, while future decisions will depend on inflation, economic growth and other conditions. Homebuyers should therefore not expect an immediate decline in borrowing costs.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

The RBI has raised the policy repo rate by 25 basis points to 5.5% following the Monetary Policy Committee (MPC) meeting held from October 5 to 7. In today\u2019s repo rate decision, the MPC unanimously approved the hike and decided to keep a tighter policy to control rising inflation and deal with global uncertainty. The […]<\/p>\n","protected":false},"author":156,"featured_media":1091655,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[29383],"acf":[],"_links":{"self":[{"href":"https:\/\/www.squareyards.com\/blog\/wp-json\/wp\/v2\/posts\/1091645"}],"collection":[{"href":"https:\/\/www.squareyards.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.squareyards.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.squareyards.com\/blog\/wp-json\/wp\/v2\/users\/156"}],"replies":[{"embeddable":true,"href":"https:\/\/www.squareyards.com\/blog\/wp-json\/wp\/v2\/comments?post=1091645"}],"version-history":[{"count":1,"href":"https:\/\/www.squareyards.com\/blog\/wp-json\/wp\/v2\/posts\/1091645\/revisions"}],"predecessor-version":[{"id":1091656,"href":"https:\/\/www.squareyards.com\/blog\/wp-json\/wp\/v2\/posts\/1091645\/revisions\/1091656"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.squareyards.com\/blog\/wp-json\/wp\/v2\/media\/1091655"}],"wp:attachment":[{"href":"https:\/\/www.squareyards.com\/blog\/wp-json\/wp\/v2\/media?parent=1091645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.squareyards.com\/blog\/wp-json\/wp\/v2\/categories?post=1091645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}