RBI policy: A cut in rate was expected; a cut in GDP growth target was not

The cut in GDP projection for FY20 is curious because it is also an admission that these 135 bps cuts in interest rates will not have a major impact on growth this year

It was widely expected that the Reserve Bank of India (RBI) would cut interest rates on Friday for two reasons. The first is that by now it has become a habit where low growth tendencies, which have taken precedence over the original goal of inflation targeting gets thumbs-up for a rate cut. The second is that over the last month or so, the government has announced various steps to revive the economy with the last measure being the corporate tax cut. A rate cut after all these announcements appeared to be a foregone decision. 

The point of interest, however, was the