Expect the unexpected from the RBI

......The market is looking at the wrong set of figures in not expecting rate cuts. The central bank is likely to look at the broad macro environment on the domestic and global front and cut the repo rate by 50 bps even as it lowers the GDP growth forecast to 6.5% levels from initial April forecasts of 7.5%. A repo rate cut of 50 bps will bring it down to 7.5% from 8% and at this level, it will be around average inflation expectations of 7% to 7.5% for full year 2012-13. An economy that is slowing considerably from growth rates of 8.4% seen in 2010-11 to 6.5% for 2011-12 and 2012-13 can live with negative real interest rates......

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