One energy shock, three answers: Uganda hikes 225 bp, Singapore holds, BoJ's Koeda leans in
Serguey Asael Shinder2 min readWithin two days, three central banks explained how the same shock — the Middle East conflict and the jump in energy prices — feeds into their own policy. Their answers differ because the shock arrives through different doors.
Uganda: the currency is the channel, so the rate moves hard. The Bank of Uganda raised its Central Bank Rate by 225 basis points to 12.0% at a special meeting on 14 October. Its statement links the conflict directly to a current-account deficit that widened by US$1.4 billion to US$4.6 billion, to capital inflows dried up by global risk aversion, and to a weaker shilling that has started to pass through to fuel and food prices. Core inflation is still 3.7%, below the 5% target — the Bank is acting on its projection of 5.5–6.0% core and 7.0–7.5% headline over the next year, and says it must contain pressures "now" to avoid entrenchment. It had already raised reserve requirements in September.
Singapore: the currency is the tool, so the setting stays. The MAS, which steers the exchange rate rather than an interest rate, kept the appreciation of its S$NEER band unchanged on 14 October. Core inflation has risen to 2.1%, energy prices are up again since September, and MAS expects inflation to stay slightly elevated before easing from mid-2027. Its existing appreciating band, set slightly steeper in July, already lets the Singapore dollar strengthen against imported inflation — so the response to the shock is built into the policy already in place.
Japan: the shock is one more reason, not the reason. Bank of Japan board member Junko Koeda said in Kumamoto on 15 October that geopolitical shocks raise import prices more visibly in Japan, partly because the yen no longer acts as a reliable safe haven. But the case Koeda made for further hikes rests on more than energy: underlying inflation anchoring near 2%, accommodative financial conditions after the September hike to about 1.25%, and a neutral rate "considerably above 1 percent." The conclusion: the Bank "should not become overly cautious" about raising rates.
What separates them. Where the shock hits the exchange rate and the balance of payments, as in Uganda, a large move comes early. Where policy already works through the exchange rate, as in Singapore, the existing setting can absorb it. Where policy is still normalising from very low rates, as in Japan, the shock is cited as an added upside risk on top of a hiking path. None of the three treats the shock as purely temporary.
Sources: Bank of Uganda, Monetary Policy Statement for October 2026 — https://bou.or.ug/uploads/MPS_October_2026_cdc1de720f.pdf; MAS, Monetary Policy Statement October 2026 — https://www.mas.gov.sg/news/monetary-policy-statements/2026/mas-monetary-policy-statement-14oct26; Bank of Japan, speech by Board Member Koeda — http://www.boj.or.jp/en/about/press/koen_2026/ko261015a.htm