In light of increasing risks from West Asia, Reserve Bank of India (RBI) Governor Sanjay Malhotra has emphasized a cautious, data-led approach to monetary policy. Speaking at Princeton University on April 18, Malhotra stated that the RBI is in a 'wait-and-watch' mode, maintaining a neutral stance while keeping the repo rate unchanged at 5.25%. The RBI projects real GDP growth for FY26 at 7.6% but anticipates a decline to 6.9% for FY27, with inflation expected to rise to 4.6%. The ongoing crisis in West Asia, which significantly impacts India's economy—accounting for about one-sixth of exports and half of crude oil imports—has led the RBI to reassess risks continuously. Malhotra highlighted the need to manage second-round inflation effects and the importance of monetary policy in stabilizing inflation expectations. The RBI's flexible inflation targeting framework has helped reduce average headline inflation to 4.7% since its adoption in 2016, demonstrating the effectiveness of robust policy measures and institutional credibility in navigating economic challenges.