The RBI is expected to raise the repo rate by 25 basis points on October 7. The repo rate is the interest rate at which the central bank lends money to commercial banks. When it rises, banks usually raise their own lending rates.

For borrowers, this means home, car and personal loan EMIs are likely to go up, or loan tenures may get longer. For savers, it is mixed news: fixed deposit rates could rise, making savings more attractive. The move aims to control inflation, which has been running above the RBI’s 4 per cent target.

Why hike now? Growth is strong at 7.8 per cent, crude oil is near $100 a barrel and the rupee is under pressure. The rate has been steady at 5.25 per cent for four reviews. Analysts expect 50 to 75 basis points of total tightening over the next year. If you are planning a big loan, locking in rates before further hikes could save money.