Stories
RBI Rate Hike Expected On October 7: Will Fixed Deposit Rates Increase?
N
News18•05-10-2026, 14:55
RBI Rate Hike Expected On October 7: Will Fixed Deposit Rates Increase?
- •The RBI is widely expected to raise the repo rate by 25 basis points to 5.50 per cent during its October 5 to 7 monetary policy meeting.
- •A rate hike could increase pressure on banks to raise fixed deposit rates to manage rising funding costs and intense competition for deposits.
- •Credit growth currently outpaces deposit growth at many banks, creating a strong incentive for lenders to attract household savings.
- •Banks are unlikely to raise FD rates uniformly or immediately, often favoring selective increases based on liquidity and specific maturity tenures.
- •Savers looking to invest in fixed deposits may benefit from a staggered laddering approach to avoid locking in funds at lower rates.
Key Questions Answered
The Reserve Bank of India's Monetary Policy Committee is widely expected to raise the repo rate by 25 basis points to 5.50 per cent on October 7, 2026, marking the first rate hike since February 2023.
A repo-rate hike generally will not change the interest rate on an existing fixed deposit because the rate remains fixed for the agreed tenure when the deposit was booked, unless it has variable-rate terms.
Banks are facing strong credit growth running ahead of deposit growth, forcing them to compete aggressively for household savings and offer more attractive term-deposit rates to fund their lending operations.
