Loan interest rates, EMIs to rise? Two back-to-back 25 bps repo rate hike from RBI soon? — SkimNews
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- SBI Research predicts the RBI will raise the benchmark repo rate by 25 basis points at the upcoming October policy and another 25 bps in December, citing rising crude prices, persistent external shocks, and broadening inflation.
- The current repo rate stands at 5.25%, held unchanged for four consecutive reviews as of August, with the next Monetary Policy Committee meeting scheduled for October 5-7, 2026.
- SBI explicitly says the projected hikes are driven by domestic economic risks and are not linked to potential action by the US Federal Reserve, citing the RBI's 2022 approach as precedent.
- Crude oil recently crossed $100 per barrel amid geopolitical uncertainty; SBI's quantile regression estimates $123/barrel over the next 15 days at the 60th percentile, while an alternative model forecasts a $105 average — though SBI flagged the higher estimate as a worst-case stress scenario, not a baseline.
- The number of commodities accounting for 90% of CPI's weighted contribution rose from 22 in January 2026 to 53 in July, with input costs outpacing output prices in crude petroleum and natural gas, beverages, pharmaceuticals, and electronics.
- On a ₹50 lakh home loan at an 8.25% floating rate with a 20-year tenure, the current EMI is ₹42,603; if the RBI raises the repo rate by 50 bps and the bank passes the hike through fully, the rate would rise to 8.75% and the EMI would climb to approximately ₹44,186.
Why it matters: If RBI delivers the two 25 bps hikes SBI Research is forecasting and banks pass them through fully, a borrower with a ₹50 lakh, 20-year floating-rate home loan at 8.25% would see their monthly EMI rise from ₹42,603 to roughly ₹44,186 — a ~₹1,583/month jump. Depositors, meanwhile, would get higher FD rates if banks mirror the policy move upward.
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