RBI report suggests digitalisation could enhance monetary policy transmission, leading to steeper reductions in inflation.

RBI's latest report on currency and finance suggests digitalisation could enhance monetary policy transmission, leading to steeper reductions in inflation. In a digitalised scenario, a 100bps rise in the policy rate might decrease inflation by 20bps, compared to 25bps in traditional circumstances. Digitalisation is thought to affect inflation through price setting behaviour and market dynamics, while lowering costs of ICT-related goods.