Central banks face calls for heightened oil shock vigilance

MAS chief economist warns energy price spikes feed into wages faster.

Central banks should exercise heightened vigilance over fiscal and financial stability risks stemming from Middle East-linked oil shocks, Monetary Authority of Singapore chief economist Edward Robinson said.

“As Philip Lane has recently emphasised, the central question for central banks is whether indirect and second-round effects are taking hold,” he said at the 13th Asian Monetary Policy Forum on 22 May.

The risk is amplified in small open economies, where energy costs pass through more quickly to wages and broader prices.

The chief economist said governments and central banks are now more preoccupied with oil shocks linked to the Gulf conflict than the tariffs that dominated policy discussions over the past year.

“A persistent supply shock to the global economy from the Gulf conflict has generated a complex mix of inflation, financial, and growth impulses,” he said.

Many Asian economies face heavier adjustment burdens because they are major energy importers, he added.

Robinson warned that export restrictions by energy-producing countries could further tighten global supply conditions and intensify protectionism. He also reiterated the longer-term need to strengthen renewable energy resilience.

The speech also touched on the global trade outlook, with Robinson saying the expected collapse in trade following the 2025 US “Liberation Day” tariffs had “largely failed to materialise.”

Instead, tariffs redirected sourcing towards other Asian economies, deepening regional supply chains and boosting trade flows amongst non-US trading partners, he added