It was the first hike by one of the major global central banks in response to the energy shock

International News via Reuters:

The European Central Bank raised interest rates for the first time in nearly three years on Thursday in the hope of curbing inflation before a surge in energy costs triggered by the Iran war spreads more broadly across the euro zone economy.

It was the first hike by one of the major global central banks in response to the energy shock and comes a week before the U.S. Federal Reserve, Bank of Japan, Bank of England and several other leading institutions take policy decisions.

The well-telegraphed ECB move came as inflation in the 21-country currency bloc is already above 3%, well in excess of the ECB’s 2% target, and economic growth is very weak – a backdrop that has economists split over the case for tighter policy.

Policymakers, some of whom had already pushed for action in April, nonetheless pressed ahead with the unanimous decision, which was accompanied by higher projections for inflation this year and the next but weaker forecasts for growth.

“The war in the Middle East is generating inflation pressures, and the decision to raise rates is robust across a range of scenarios mapping out how the shock might evolve,” ECB President Christine Lagarde said in her opening statement.

However, ECB policymakers see a pause at their next meeting in July as the more likely scenario, if energy prices stay near their current level.

Nevertheless, they remain open to further tightening, possibly as soon as September, partly because the bank’s own updated projections were predicated on more policy tightening, two sources told Reuters.

LAGARDE PUSHES BACK ON ‘INSURANCE HIKE’

Economists had expected Thursday’s move, saying it was mainly designed to keep a lid on inflation expectations and safeguard the ECB’s credibility after it was slow to react to a post-pandemic inflation spike in 2022.

Several ECB watchers called it an “insurance hike” – a precautionary step that could be reversed if price pressures fade.

But Lagarde rejected that characterisation, saying the hike was an “obvious” decision that would stand even in a “milder” scenario in which inflation falls below 2% by the spring of next year.

“If we were not taking this very obvious monetary policy decision, then at the end of the medium term that we look out for projection purposes, we would be north of our target,” she told a press conference.

ING’s global head of macro Carsten Brzeski said Lagarde’s comments suggested more tightening is on its way.

“The warning that inflationary pressures were broadening, as well as the emphasis on broadening indirect effects from higher energy prices, suggest that today’s rate hike is not yet the end,” Brzeski said.

INFLATION PROJECTIONS REVISED UP, GROWTH TRIMMED

Supporting the rate hike, the ECB raised its expectations for inflation – substantially for a core measure – while barely trimming the outlook for growth.

The ECB’s new baseline projections for inflation put it at 3.0% this year, 2.3% in 2027 and 2.0% in 2028, bringing them closer to an “adverse” scenario the bank had published in March.

Growth forecasts for 2026 and 2027 were trimmed by 10 basis points and the 2028 figures upgraded by the same degree.

Consumers, companies and financial investors have revised their own views about price hikes, although medium-term expectations remain close to the ECB target and far from their levels following Russia’s 2022 invasion of Ukraine.

A POLICY MISTAKE?

Not all economists are convinced that a hike is justified: some have warned that the ECB risks tightening into an economy that is already paying a high price for the conflict in Iran. 

Paul Donovan, chief economist at UBS Global Wealth Management, said the ECB was committing an “error” and was stuck in an “unhelpful 2022 mindset”, referring to the inflation rebound that followed COVID-19 lockdowns.

A Reuters analysis of earnings call transcripts by euro zone companies showed just 40% of those outside the financial sector had raised prices or were planning to, roughly half the share seen in 2022 as the Ukraine war pushed up energy prices.

Berenberg’s Holger Schmieding also called Thursday’s decision “a policy mistake” given the stagnant labour market and weak consumer demand.

“Amid the ongoing destruction of demand, the inevitable temporary surge in prices … seems unlikely to turn into a protracted inflation problem that would need to be addressed by higher rates,” he wrote in a note before the meeting.

But the ECB has sharpened its messaging in support of tighter policy. Chief Economist Philip Lane – typically seen as an inflation “dove” – has said the Iran-related shock may be broader in scope than the Ukraine crisis, as it affects global energy markets rather than primarily Europe.

Editing by Catherine Evans

These are among events being examined by investigators hunting for the “patient zero”, or earliest infection, of the Ebola epidemic raging in the war-torn Democratic Republic of Congo

International News via Reuters:

By the time the truck pulled away from the morgue in Bunia, the morning heat hung heavily over the road to Mongbwalu.

The body of a 44-year-old Congolese pastor lay inside a wooden coffin strapped into the back of an aging Nissan SUV with the backseats pushed flat. A group of young relatives were crammed in, too, sitting atop the casket.

The drive across Ituri province takes about three hours, longer when the dirt roads are as dry and broken as they were that February day. The four-wheel-drive bucked violently, showering dust over the potholes, rocks and gullies carved into the red earth.

By the time the truck reached Mongbwalu, the coffin was cracked, after collapsing under the weight of those sitting on it.

These are among events being examined by investigators hunting for the “patient zero”, or earliest infection, of the Ebola epidemic raging in the war-torn Democratic Republic of Congo, according to four experts on the team conducting the health ministry inquiry.

The investigators said the casket’s rocky journey preceded one of the earliest suspected super-spreader events: the February 4 funeral of the man inside the coffin, Pastor Paluku Makundi Denis.

Health authorities are struggling to catch up with the mushrooming epidemic of a rare Ebola strain that kills 30% to 50% of those infected and has no vaccine or cure. The outbreak has caused about 635 confirmed infections and at least 127 deaths in eastern Congo, according to the country’s health ministry. The true toll could be much higher, officials warn.

A surveillance epidemiologist on the inquiry estimated the strain, ‌Bundibugyo, had been circulating for four to six months before Congo’s official outbreak confirmation on May 15. He stressed more work is needed to determine whether Pastor Makundi, who was never tested for Ebola, was infected and to identify the outbreak’s origin — a key step to understanding its scale and preventing further epidemics.

Congo’s health ministry and Ituri’s health authority didn’t respond to comment requests. WHO chief Tedros Adhanom Ghebreyesus declined to comment on Makundi’s case and said many outbreak scenarios are being investigated.

Reuters pieced together the events surrounding the pastor’s funeral in the remote gold-mining town of Mongbwalu through interviews with doctors, local officials and victims’ relatives and a review of hospital, burial and government records.

The broken coffin was only the beginning.

The corpse was transferred into a new casket by residents who touched the remains before community members converged for the funeral – a perilous move if Makundi had Ebola because victims’ bodies are highly infectious.

Within weeks, dozens of deaths were recorded in the locale.

The original cracked coffin was meanwhile set ablaze in mysterious circumstances, helping spawn rumors that a curse caused the spreading sickness.

THE PASTOR’S DEATH AND A NEW COFFIN

A Bunia hospital had diagnosed Makundi with peritonitis, a severe abdominal infection, on February 3, according to three doctors and a nurse there.

No samples were taken for Ebola testing, they said, because Congolese officials were unaware of any outbreak.

David Heymann, an infectious-disease professor at the London School of Hygiene and Tropical Medicine, said peritonitis is one manifestation of a severe Ebola infection but it was impossible to confirm the cause of Makundi’s death without testing.

The broken coffin carrying the pastor arrived the afternoon of February 4 in Mongbwalu, a town of about 130,000 people, many of them transient.

Dozens of mourners had gathered at a family compound. Silence fell as the pastor’s father, Pascal Kibali, known as Paka, inspected the broken box in the fading light.

Before moving to Bunia to become a clergyman, Makundi – better known as Paluku – had been a pillar of Mongbwalu’s ethnic Nande community and a founder of the local charcoal cooperative, the 70-year-old Kibali said.

He recalled thinking: “My eldest son cannot be buried in such a coffin.”

Relatives hurried to buy a new casket from a local coffin maker.

The body was transferred before sunset, and a wake was held at the family compound before a cemetery burial. At traditional Congolese wakes, mourners often touch and kiss the body. It remains unclear whether the tradition was followed in this case.

THE FUNERAL AND ITS DEADLY AFTERMATH

More than 80 relatives, friends and neighbors assembled at the local cemetery at dusk, according to Edmond Kambale Katuwene, the leader of the town’s Nande community. A priest led prayers, urging mourners to reflect on the fragility of life and prepare for their own end, Katuwene said.

In the following days, several community members began falling ill, Mongbwalu’s Mayor Sesereki Mandro Israel said. Nearly 50 deaths were recorded within two weeks of the burial, he said, with many presenting symptoms of Ebola: fever, vomiting, bleeding.

Pastor Makundi’s brother Idi was among the first. The 36-year-old miner died on February 16 from suspected appendicitis, according to a May 16 situation report by the provincial health authority. Within weeks, another brother and a relative died, from suspected hemorrhoids and tuberculosis, respectively, according to the bulletin, which flagged the deaths as needing further investigation.

The relatives’ deaths preceded at least 108 deaths in Mongbwalu between April and May, according to the same report by the Ituri authority, an arm of the national health ministry. Patients in family clusters collapsed with fever, vomiting, diarrhea and in some cases hemorrhaging symptoms, it said.

The deaths are among those being examined by investigators seeking to map the spread of Ebola, with Makundi’s the earliest suspected case, according to the report. The disease, it said, might have smoldered undetected in Mongbwalu for months.

Congo’s health ministry said on June 9 that at least 40 people were confirmed to have died of Ebola in Mongbwalu. Aid workers warned the official figures may be incomplete due to limited testing.

RUMORS OF COFFIN SET ABLAZE SOW CHAOS

As tragedy rippled through the community, frightened residents searched for answers. Some turned not to clinics or laboratories, but to the events surrounding Pastor Makundi’s burial.

As prayers ended and families drifted away from the cemetery in the warm evening, word spread that the damaged coffin had been set ablaze.

None of the six relatives and locals interviewed said they witnessed the fire, though all reported seeing the coffin’s burnt remains. Pastor Makundi’s father and uncle blamed a group of intoxicated youths but had no further details. The whole family was left stunned and struggling to understand what had happened, they added.

Among residents, the burned coffin was viewed as an affront to ancestors, community leader Katuwene said.

The unease had deepened after the burial of Tsongo Kenda Kenda, Makundi’s younger brother, when local police intervened during a dispute between relatives over the opening of the coffin, according to the May 16 situation report at the provincial authority.

Katuwene said family members had argued over where the pre-burial wake should be held and that a relative removed the coffin lid in protest before putting it back on. Such meddling is viewed by many as disrespectful to the dead, Katuwene added.

For some residents, neighborhood chief administrator Joseph Payi Mute said, the subsequent deaths were interpreted not as the work of a virus but a punishment from ancestors angered by what had occurred around the two brothers’ burials.

Jeremy Rayan Tamelegu, who was working as a mining-geology consultant in the same neighborhood as the pastor’s family, said the unexplained surge in sickness and death fed into the curse narrative. He saw people in the neighborhood suddenly become ill and die within days.

Soon the story took on a life of its own on social media across Mongbwalu and the surrounding area. Gallows humor prevailed among the nervous population, even prompting a local music group to record a song about the rumors.

One lyric: “We hear a coffin is wandering Mongbwalu, leaving devastation in its wake.”

The tune helped ignite a TikTok craze across eastern Congo, with users posting videos of coffins appearing to move by themselves along dirt roads or float above terrified residents.

‘THEY VANDALIZED MY SON’S COFFIN AND BLAMED ME’

By the time provincial health investigators from the patient-zero inquiry arrived in Mongbwalu in early May, curse rumors spread and some residents had grown hostile towards health workers and officials, one investigator said.

The mistrust has turned violent, much as in previous Ebola outbreaks, when many locals have blamed the plague on modern medicine.

On May 22, an unspecified number of youths in the nearby village of Mabilindey attacked a response team gathering information about a confirmed Ebola case, according to the epidemiologist on the patient zero inquiry. A day later, assailants set fire to an isolation tent erected by aid workers at Mongbwalu General Hospital.

It’s not just medics being blamed.

Pastor Makundi’s father, Paka Kibali, said his family has been unjustly accused by some locals of starting the outbreak because of the events around the two burials.

“They vandalized my son’s coffin and blamed me for the deaths that followed,” he said in tears. “Yet I am the victim – it was my son’s coffin that was desecrated.”

Reporting by Giulia Paravicini, Clement Bonnerot and Fiston Mahamba; Additional reporting by Erikas Mwisi, Benoit Nyemba and Gradel Muyisa in Bunia, Silvia Aloisi in Nairobi and Jennifer Rigby in London; Editing by Pravin Char

Security officials in Geneva outlined their plans on Thursday in preparation for around 50,000 people expected for the protest on Sunday in Geneva

International News via Reuters:

France plays host to a Group of Seven summit next week but it is shopkeepers in neighbouring Switzerland who have already boarded up many businesses ahead of an anti-G7 protest expected to roll through Geneva this weekend.

Security officials in Geneva outlined their plans on Thursday in preparation for around 50,000 people expected for the protest on Sunday in Geneva. The plans include the closure and control of 27 border crossings between France and Switzerland from Friday evening, officials said.

G7 leaders will land in the city – on the western French-speaking side of Switzerland – before being transported across the border to the summit venue in the French town of Evian-les-Bains. 

Switzerland is mobilising 4,000 soldiers inside its territory to ensure security during the three-day meeting of the leaders of Britain, Canada, France, Germany, Italy, Japan and the United States, alongside the European Union, the army said last week. France said it was deploying 8,000 police officers for the summit in Evian beginning on Monday.

Scores of shops across Geneva have been boarded up over fears of damage during the planned anti-G7 protest.

Damien Gall, owner of carpentry company Espace, said it has installed more than 2,000 square metres of wooden panels for businesses to protect their premises.

Taxi driver Lamine Lasbet said the preparations for the protest were having a “catastrophic impact” on business.

“We’ll stay at home, I won’t lie. So it’s three or four days without working,” Lasbet said.

ECONOMIC FALLOUT

Some Geneva residents raised concern about the fallout from the summit.

“Geneva isn’t in France, so the problem is spilling over into another country,” said Eric Affolter, a souvenir store owner, recalling how properties were damaged in 2013 when a G8 summit was held in Evian as protesters clashed with police on Geneva’s left bank.

Carole-Anne Kast, a senior local authority official, said 

the canton of Geneva would likely have to spend about 20 million Swiss francs ($25.01 million) on security costs.

She said authorities have tried to mitigate the risks of violence and property damage.

($1 = 0.7996 Swiss francs)

Reporting by Olivia Le Poidevin; Editing by Emelia Sithole-Matarise

The two sides in 2004 lodged parallel cases at the World Trade Organization over subsidies for U.S. plane maker Boeing and European rival Airbus, accusing each other of unfair competition

International News via Reuters:

The United States and the European Union have yet to decide whether to continue suspending or to reimpose tariffs on $11.5 billion of goods in a decades-long dispute over aircraft subsidies with just days to go before their truce expires.

The two sides in 2004 lodged parallel cases at the World Trade Organization over subsidies for U.S. plane maker Boeing and European rival Airbus, accusing each other of unfair competition.

The WTO in 2019 authorised the United States to impose tariffs on $7.5 billion of EU goods, such as cheese, in the case against Airbus. A year later, it gave the EU the right to respond with countermeasures on $4 billion of U.S. imports, including tobacco and spirits. On June 15, 2021, both sides agreed to suspend these tariffs for five years.

A European Commission spokesperson said on Thursday that discussions were ongoing to extend the suspension.

The two sides said in 2021 they aimed to work on an overarching agreement on subsidies for large aircraft and to counter investments in aircraft by “non-market actors,” meaning China. They said then they expected the dispute would be resolved within five years.

Instead, tariff tensions have risen, with the European Union facing fees on most of its exports to the United States, although aircraft and aircraft parts are excluded.

Reporting by Philip Blenkinsop; editing by Barbara Lewis