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SBI Research Predicts Two RBI Repo Rate Hikes, Higher EMIs
SBI Research thinks the Reserve Bank of India may raise its main interest rate twice.
Each possible increase would be 25 basis points, or 0.25 percentage points.
The first increase could come in October and another in December.
The report says expensive crude oil and wider inflation are important reasons.
If banks pass on the increases, people with floating-rate loans may pay higher interest or larger EMIs.
Fixed-rate loans would usually not change unless they are refinanced.
Banks may also increase interest rates on new fixed deposits.
However, these hikes are a forecast and have not been announced by the RBI.
SBI Research has urged the RBI to raise the repo rate by 25 basis points in October and again in December.
The RBI kept the repo rate unchanged at 5.25% in August, its fourth consecutive hold.
The proposed hikes are attributed to rising crude prices, external shocks and broader inflationary pressures.
Floating-rate borrowers could face higher loan rates or EMIs, while fixed-rate loans would generally remain unchanged.
Higher repo rates could also lead financial institutions to offer improved fixed-deposit rates.
- Who
- SBI Research and the Reserve Bank of India are central to the report and possible policy decision.
- What
- SBI Research has recommended two 25-basis-point repo rate increases, potentially raising borrowing costs and deposit rates.
- Where
- The potential decision concerns India's monetary policy and financial institutions.
- When
- The next RBI Monetary Policy Committee meeting is scheduled for October 5-7, 2026; another hike is suggested for December.
- Why
- The report cites crude oil prices above $100 a barrel, persistent external shocks and signs of broader inflation.
SBI Research Recommendation
RBI's Current Position
Near-term interest-rate direction
SBI Research Recommendation
SBI Research strongly advocates a 25-basis-point hike in October followed by another in December, citing inflation and economic risks.
RBI's Current Position
The RBI most recently kept the repo rate at 5.25% in August for the fourth consecutive review; the articles do not say whether it has accepted the proposed hikes.
Reason for possible hikes
SBI Research Recommendation
SBI Research attributes the recommendation to rising crude prices, persistent external shocks and inflation becoming more widespread.
RBI's Current Position
The report says the proposed hikes would reflect evolving economic risks rather than any potential action by the United States Federal Reserve.
Key facts
- Current repo rate
- 5.25%, unchanged in August for the fourth consecutive review.
- Recommended October hike
- 25 basis points.
- Recommended December hike
- Another 25 basis points.
- Next MPC meeting
- October 5-7, 2026.
- Illustrative home loan impact
- A ₹50 lakh, 20-year floating-rate loan at 8.25% has an estimated EMI of ₹42,603; after a 50-basis-point pass-through to 8.75%, the EMI would be approximately ₹44,186.
- Crude oil outlook
- Crude recently crossed $100 a barrel; one model estimated $123 a barrel at the 60th percentile over the next 15 days, while another estimated an average of $105.
- Inflation breadth
- The number of commodities accounting for 90% of CPI's weighted contribution rose from 22 in January 2026 to 53 in July.
Quotes
SBI Research
Research division of the State Bank of India
“We strongly advocate a 25-bps rate hike in the upcoming October policy (followed by another in December in quick succession)”
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Sources
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