The Reserve Bank of India’s monetary policy committee meets on October 1, and economists are debating whether interest rates will rise. Here is what borrowers should know.

The repo rate currently stands at 5.25 per cent. HSBC, Nomura and EY all expect a 25 basis point hike at this meeting, with Nomura forecasting another in December, taking the rate to 5.75 per cent.

The case for a hike rests on higher crude oil prices, a weaker rupee and tighter global financial conditions. The RBI has also been draining excess liquidity through bond sales and reverse repo operations.

A rate hike would raise banks’ cost of funds, and most lenders pass that on by increasing floating-rate loan rates, which affects home, car and personal loan EMIs.

Existing borrowers on external benchmark-linked loans would feel the impact within weeks, while new borrowers face costlier offers. Fixed-rate loans are unaffected. That said, not all economists agree a hike is certain. Some argue growth concerns could keep the RBI on hold. The October 1 announcement will settle the debate.