Repo Rate News
Reserve Bank of India (RBI) conducted its latest Monetary Policy Committee (MPC) meeting from October 5 to 7, 2026, under the chairmanship of RBI Governor Sanjay Malhotra. In its latest policy decision announced on October 7, 2026, the MPC raised the repo rate by 25 basis points from 5.25% to 5.50%. This was the first repo rate hike by the RBI since February 2023.
Basis Points Meaning
- Basis points (bps) are a standard financial unit used to measure small changes in interest rates, yields, or other percentage-based values.
- They provide precision when expressing movements in financial indicators. For example, a 25 bps hike means a 0.25% increase.
- Basis points are widely used to describe changes in interest rates on loans, savings, bonds, and other financial instruments, ensuring clarity where even minor shifts matter.
RBI Repo Rate
- The repo rate is the interest rate at which the RBI lends short-term funds to commercial banks against government securities.
- It serves as a primary tool for the RBI to regulate liquidity, control inflation, and influence overall economic activity.
- By adjusting the repo rate, RBI can either encourage banks to borrow more (by lowering the rate) or discourage borrowing (by raising the rate), thus influencing the money supply in the economy.
- The reverse repo rate is the interest rate at which the central bank (such as the RBI) borrows surplus funds from commercial banks, thereby absorbing excess liquidity from the system.
- It is the opposite of the repo rate, where commercial banks borrow from the central bank.
Also Read: RBI Monetary Policy 2025
Impact of Increased Repo Rate
An increase in the RBI repo rate makes borrowing costlier for banks, which can lead to higher interest rates for consumers and businesses.
- Loans become expensive: Home, auto and personal loans may become costlier, especially floating-rate loans.
- EMIs may increase: Existing borrowers with floating-rate loans may face higher EMIs or a longer repayment period.
- Inflation may decline: Higher borrowing costs reduce spending and demand, helping the RBI control inflation.
- Economic growth may slow: Costlier credit can reduce consumption, investment and business expansion.
- Savings may increase: Banks may offer higher interest rates on fixed deposits and other deposits, encouraging savings.
- Credit growth may slow: Higher interest rates can reduce demand for bank loans.
- Investment may decline: Businesses may postpone expansion and investment projects due to higher financing costs.
- Rupee may strengthen: Higher interest rates can make Indian assets relatively more attractive to investors, potentially supporting the rupee.
Last updated on Oct, 2026
→ UPSC 2027 Notification will be released on 13 January 2027 at upsconline.nic.in.
→ Check Nobel Prize 2026 Winners List here.
→ Download PIB PRiSM Monthly Magazine 2026 here.
→ Check UPSC Monthly Current Affairs Magazine The Recitals here.
→ Check out the latest UPSC Syllabus here.
→ Download UPSC Model Answers for Mains 2026
→ UPSC Mains Question Paper 2026 is out now for Essay & GS Paper 1, 2, 3 & 4.
→ UPSC Calendar 2027 has been released.
→ Enroll in Vajiram & Ravi’s UPSC Mains Test Series 2027 for structured answer writing practice, expert evaluation, and exam-oriented feedback.
→ Join Vajiram & Ravi’s UPSC Mentorship Program 2027 for personalized guidance, strategy planning, and one-to-one support from experienced mentors.
→ Go through the UPSC Mains Previous Year Papers to enhance your preparation.
→ UPSC has released UPSC Toppers List 2025 with the Civil Services final result on its official website.
→ Also check Best UPSC Coaching in India
Repo Rate FAQs
Q1. What is the repo rate?+
Q2. What is the current repo rate?+
Q3. What is the repo rate of RBI in 2026?+
Tags: prelims pointers upsc current affairs upsc prelims current affairs
