Asia's central banks face a policy reversal as oil prices surge to $83 on Iran conflict fears, eroding earlier rate-cut expectations. India and the Philippines now anticipate rate hikes, while Thailand and Indonesia see easing probabilities dwindle. OCBC estimates a 10% oil price spike could boost inflation by 0.6-0.8 percentage points in Thailand and the Philippines, complicating growth support efforts.

Indonesia and Malaysia grapple with currency pressures, with the rupiah hitting record lows prompting Bank Indonesia interventions. Brent crude’s jump risks worsening current account deficits, as India—importing 90% of oil—faces disrupted Strait of Hormuz trade. Central banks weigh inflation risks against growth, with Malaysia’s swaps pricing 30%+ probability of hikes and Thailand’s inflation exiting negative territory.