The Reserve Bank of India raised its key repo rate by 25 basis points to 5.50 per cent on October 7, its first hike since February 2023. Here is what it means for your money.

Loans get costlier. Banks will gradually pass the hike to borrowers, so home, car and personal loan EMIs are likely to rise in the coming months. New borrowers will face higher rates immediately.

Savers benefit. Fixed deposit rates tend to rise after a repo hike, so locking in deposits now could earn you more. On the flip side, existing bond and debt fund investors may see short-term dips in NAVs as yields rise.

The RBI also shifted its stance to calibrated tightening, signalling it is worried about inflation. Wholesale food prices and high oil, with Brent above 102 dollars, are keeping pressure on.

What next? Goldman Sachs expects another 25 basis point hike in December, while SBI Research has flagged a possible 50 basis point jumbo move that would take the repo rate to 6 per cent.