Interest rates and inflation, India and abroad

The central bank rate sets the price of borrowing and saving

Each figure above is the rate a central bank uses to steer the cost of money in its economy: the rate at which it lends to banks, or pays them for the cash they leave with it overnight. Banks price their loans and deposits off it. A change reaches borrowers and savers within weeks, though rarely one for one, and fixed-rate products only feel it when they come up for renewal.

Each bank announces its decisions on dates it publishes a year ahead: six a year for the Reserve Bank of India, eight for the other five. Between those dates the rate does not move, except in an emergency.

What each rate moves where you live

In the UK, tracker mortgages move with Bank Rate soon after each decision, and easy-access savings rates usually follow more slowly. A fixed-rate deal is unaffected until it ends.

In the US, the Fed’s rate feeds the prime rate, conventionally three points above the top of the Fed’s range, which sets home-equity lines and credit cards. Thirty-year fixed mortgages follow long-term Treasury yields more closely than the Fed’s rate.

In the euro area, variable-rate mortgages are tied to Euribor, which moves with what markets expect the ECB to do. In Canada, variable-rate mortgages follow each lender’s prime rate, which moves with the Bank of Canada’s rate. In Australia, where many home loans are variable, lenders usually pass a cash rate change on within weeks. To compare what lenders offer NRIs in each country, see the NRI mortgage comparator.

India’s repo rate reaches NRIs in two ways

New floating-rate home loans from Indian banks have been linked to an external benchmark since October 2019, usually the repo rate. The loan’s rate resets at least once every three months, so a repo change shows up in your EMI or your remaining term within a quarter. The home loan EMI calculator shows what a rate change does to a given loan. The RBI raised the repo rate to 5.50% on 7 October 2026; what that rise means for NRI deposits and loans is covered separately.

Rupee deposits are the second route. Each bank sets its own NRE and NRO fixed deposit rates, and they tend to follow the repo rate with a lag; current rates are in the FD rate comparison. FCNR(B) deposits, held in foreign currency, are different: the RBI caps their rates at a margin over each currency’s own overnight benchmark, so they track the Fed, the Bank of England or the ECB more than the repo rate.

A gap between two countries’ rates is not a gain

When India’s rate is two points above yours, a rupee deposit pays roughly two points more than a similar deposit abroad. That edge is gone if the rupee falls 2% against your currency over the same year, and over the past twenty years the rupee has fallen against the pound, the dollar and the euro. The historical exchange rates show how far it moved in the last twelve months. Compare the rate gap with the currency risk, not the rate alone.

Inflation here is a national average

Each inflation figure is the change in consumer prices against the same month a year earlier, as the country’s statistics office publishes it. It measures a basket of goods and services bought by a typical household across the whole country. Your own costs depend on what you spend: rent in one city, school fees, flights home. The figures are shown for information, not as a measure of anyone’s cost of living.

India’s figure is the all-India consumer price index for rural and urban areas combined, on the 2024 base that replaced the old series from January 2026. The euro-area figure is the harmonised index Eurostat publishes for the countries that use the euro. The Fed, the ECB, the Bank of England and the Bank of Canada aim for 2% inflation, the Reserve Bank of Australia for 2% to 3%, and the RBI for 4%, with a band of two points either side.

Central bank rates are what each bank sets, not what a lender will charge you. Check a product’s own rate before you borrow, deposit or move money.