RBI's rate cut won't mean lower lending rates

RBI expects India's growth rate to rise from 7.2% in 2018-19 to 7.4% in 2019-20

The Reserve Bank of India (RBI) surprised analysts earlier this month by opting for a 25 basis points cut in the policy rate. Three points about the policy change are worth noting. First, the RBI’s action is in line with the stances of central banks elsewhere. Global growth prospects are perceived to have weakened. As a result, central banks in the US, the UK and Australia have signalled a willingness to ease monetary policy. Indeed, governments in the US and Europe have moved towards a combination of fiscal as well as monetary loosening.

In his statement, the RBI governor indicated