The Iran war and the effective closure of the Strait of Hormuz have triggered one of the largest energy supply shocks in modern history, sending Brent crude surging past $100 a barrel. With nearly 80% of the trapped crude and LNG destined for Asia, the region is exceptionally vulnerable to these bottlenecks. But the crisis extends well beyond energy – crippled supplies of critical inputs such as helium, aluminum and fertilizers threaten a broader inflationary spike across regional manufacturing and agriculture sectors.
This creates a complex dilemma for monetary policymakers. Central banks must navigate the sudden inflationary jolt of $100 oil against the structural headwinds of slowing growth and the threat of AI-related job losses. The balancing act is proving especially tricky for the Reserve Bank of Australia and the Bank of Japan. Louis Kuijs, Chief Economist for Asia-Pacific at S&P Global Ratings, joins John Lee on the Asia Centric podcast to unpack the vulnerabilities of Asia's net energy importers, the outlook for regional currencies, and why central bankers face an unenviable trade-off.
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