Mumbai: Policy rate tightening could anchor inflation expectations, reducing aggregate demand and headline inflation by 160 basis points each till Q2 of 2024-25 said the Reserve Bank of India’s (RBI) October Bulletin.“Monetary policy shocks significantly affected money, government securities, and corporate bond market segments with relatively smaller effects on the forex and stock market,” the RBI’s ‘Monetary Policy Transmission in India: The Recent Experience’ said. The article has been authored by Michael Debabrata Patra, Indranil Bhattacharyya, Joice John, and Avnish Kumar.“The macroeconomic impact of monetary policy on aggregate demand and inflation indicate that the 250 basis points increase since May 2022 has negatively contributed to aggregate demand and headline inflation by 160 bps each till Q2:2024-25, working through various channels of policy transmission,” the article said.Meanwhile, another article “How Indian Banks are Adopting Artificial Intelligence?” pointed out that Indian banks are increasingly adopting AI-related technologies in recent years, exploring newer technologies like Robotic Process Automation (RPA), Internet of Things (IoT) and Natural Language Processing (NLP). While private sector banks were initially more proactive towards AI and related technologies, there is an increased frequency of AI-related technologies in the annual reports of public sector banks which suggests their increased focus on AI in recent years, with many public-sector banks now appearing to be broadly at par with their private sector peers said the article.The size of total assets and capital to risk-weighted assets ratio (CRAR) of banks are found to be positively associated with AI adoption, reflecting the role of economies of scale and financial health in influencing technological adoption.
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