The Reserve Bank of India’s upcoming monetary policy decision could have direct implications for borrowers and savers if the central bank raises the repo rate by 25 basis points.

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The RBI repo rate currently stands at 5.25%, while several experts expect the Monetary Policy Committee (MPC) to consider raising it to 5.50%. The policy decision is scheduled for October 7, with inflation, crude oil prices, the rupee and global interest-rate conditions among the factors being closely watched.

For floating-rate home loan borrowers, a repo rate hike could increase borrowing costs. However, the immediate impact on the EMI would depend on the lender, the loan’s benchmark and how the bank passes on changes in its lending rate. Borrowers should therefore check whether their loan is linked to an external benchmark such as the repo rate.

The impact could be different for fixed deposit investors. A higher policy rate can create room for banks to offer more attractive interest rates on fresh FDs, although the extent and timing of any increase would depend on individual banks and market conditions.

Existing FD holders generally continue to receive the rate applicable when their deposit was booked until maturity. Therefore, investors with upcoming maturities may have a better opportunity to lock in higher rates if banks revise their deposit rates following a repo rate hike.