Loan News · 28 October 2026 · 3 min read
In short: Deutsche Bank expects the Reserve Bank of India to raise the repo rate by 0.25% in December 2026 and by another 0.50% in the first half of 2027, taking it to 6.25%. The repo rate is now 5.50% after the RBI’s hike on 7 October. This is a bank’s forecast, not an RBI decision.
The forecast in numbers
| Item | Figure |
|---|---|
| Current repo rate | 5.50% (raised 0.25% on 7 October 2026) |
| Deutsche Bank forecast | 6.25% by first half of 2027 |
| Expected steps | 0.25% in December 2026, 0.50% in H1 2027 |
| CPI inflation forecast | About 6% in Oct–Dec 2026; 5% average in FY27 |
| Wholesale inflation | Above 11% |
| Rupee | Could weaken beyond 97 per dollar in 2027 |
The repo rate is the rate at which the RBI lends to banks. When it rises, banks usually raise loan rates. Deutsche Bank’s view is more hawkish than the market average. It points to high oil prices, a possible fuel price rise after Diwali, and household inflation expectations that have climbed to 10% from 8%.
How your EMI could change
Example for a ₹30 lakh home loan over 20 years (illustrative rates):
| Loan rate | Monthly EMI | Extra per month |
|---|---|---|
| 8.50% | ₹26,035 | — |
| 8.75% (+0.25%) | ₹26,511 | ₹476 |
| 9.25% (+0.75%) | ₹27,476 | ₹1,441 |
What it means for you
- Repo-linked loans (most new home loans) usually reset within a few months of an RBI move. MCLR loans change only on their reset date.
- Banks often stretch the tenure instead of raising the EMI. Ask your lender which it will do, since a longer tenure adds a lot of interest.
- Part-prepayments, even small ones, cut the interest you pay when rates are rising.
- Depositors may see fixed deposit rates go up if hikes happen.
Work out your own numbers with our EMI calculator, and see how banks raised loan rates after the October hike.
Sources
- Daijiworld: RBI may raise repo rate to 6.25% by first half of 2027: Deutsche Bank
- Asianet Newsable: Deutsche Bank projects RBI repo rate hike to 6.25%
- Angel One: RBI increases repo rate to 5.50%
This is a news summary for education, not investment advice. Figures are as reported on or before 28 October 2026; check official sources before making decisions.