RBI Hikes Repo Rate by 25 Basis Points to 5.50%, FD Rates May Rise

New Delhi, 07 October 2026 After years of declining interest rates, fixed deposit investors may finally see a shift in their favour. The Reserve Bank of India has raised the repo rate by 25 basis points, taking it from 5.25% to 5.50%, after the conclusion of its three-day Monetary Policy Committee meeting on Wednesday, October 7. The move could gradually influence interest rates offered on deposits by banks and financial institutions. The latest hike is the first increase in the repo rate since February 2023. Since then, the rate cycle had largely moved downward, with banks also cutting deposit rates over time. However, geopolitical tensions causing supply disruptions, elevated crude oil prices and the recent US Federal Reserve rate hike had pointed towards the possibility of a change in the RBI’s approach. The impact of the RBI’s decision was seen shortly after the announcement, with Bajaj Finance increasing its fixed deposit rates by up to 40 basis points. The move could signal a broader reassessment of deposit rates as financial institutions respond to the change in the policy rate. Adhil Shetty, CEO, Bankbazaar, said, "Savers may see higher deposit rates over time, with new deposits repricing first. For investors, the stance and the pace of further steps are the signals to watch. A useful first step for households is to check how their own loan and deposits will be affected." The repo rate increase has brought renewed attention to fixed deposits after a prolonged period of falling rates. While new deposits could see changes sooner, investors will be watching the RBI’s future policy decisions and the response of banks and financial institutions to determine how far deposit rates may move.