Aid supplies to Gaza and sub‑Saharan Africa are being affected by the conflict, as humanitarian relief that needs to travel through the Strait of Hormuz or through airspace in the Gulf has been largely blocked or constrained

International News via Reuters:

The United Nations aid chief warned on Wednesday that the conflict in the Middle East is straining humanitarian operations worldwide, disrupting supply chains and slowing the delivery of life‑saving assistance to numerous crisis zones.

“We are in a moment of grave peril for the Middle East and, actually I believe, for the wider world,” Tom Fletcher, the U.N. aid chief, told Reuters.

The U.S.-Israeli war with Iran, which has expanded to Lebanon and dragged in Gulf countries, has convulsed global markets and disrupted supply chains, with airspace closures and the halt of shipping ​through the critical Strait of Hormuz. 

Fletcher said aid supplies to Gaza and sub‑Saharan Africa are being affected by the conflict, as humanitarian relief that needs to travel through the Strait of Hormuz or through airspace in the Gulf has been largely blocked or constrained.

Conflict-ridden Somalia, which is facing a major drought, and Sudan are among a number of countries facing dire humanitarian crises.

“These (constraints) will damage our humanitarian supply chains, reduce the humanitarian supplies we can get to people who need them, but they’ll also drive up energy costs and food costs across the region,” Fletcher said. 

“This really is a perfect storm of factors right now, and I’m seriously worried,” he stated.

There is particular concern for aid supplies to sub‑Saharan Africa, Flether said, which are being impacted by restricted movement through the Strait of Hormuz, with alternative routes slapped with rising freight costs. 

Higher oil prices are making the U.N.’s aid deliveries by air more expensive, at a time when UN agencies and NGOs budgets are already facing major donor cuts, Fletcher explained.

“We’ve just about put some money together to keep more of our UN humanitarian flights in the air, but they’ve suddenly, almost overnight, become much more expensive,” Fletcher said. 

Reporting by Olivia Le Poidevin, Editing by William Maclean

Leaders from around the Americas, including Argentina’s Javier Milei, Ecuador’s Daniel Noboa and Paraguay’s Santiago Pena have all flown in to Chile to attend the transfer of power ceremony

International News via Reuters:

Jose Antonio Kast is set to be sworn in as Chile’s next president on Wednesday, marking the country’s sharpest shift to the right in decades as the country follows the region’s recent conservative shift.

Leaders from around the Americas, including Argentina’s Javier Milei, Ecuador’s Daniel Noboa and Paraguay’s Santiago Pena have all flown in to Chile to attend the transfer of power ceremony in the coastal city of Valparaiso, where Congress is located.

Kast takes over from left-wing President Gabriel Boric, to whom he lost the 2021 election, at a time when Chileans are worried about rising crime and the economy.

Kast has promised to clamp down on migration and crime while boosting economic growth through deregulation, spending cuts and market-friendly policy. Chile is the world’s largest copper producer and Kast was elected during an economic upswing, but takes office as the Iran war rattles global markets.

The political transition also saw increased tensions between the incoming and outgoing administration over heightened pressure from the U.S. over a proposed Chinese undersea cable project.

“(Kast) will have to manage an increasingly challenging international geopolitical landscape,” said Guillermo Holzmann, a political analyst from the University of Valparaiso, noting economic risks from the Iran war, the U.S.’ security strategy in the region and China’s influence in Latin America.

“These decisions will require sophisticated diplomacy and strategic medium- and long-term vision.”

Reporting by Alexander Villegas and Fabian Cambero; Editing by Aidan Lewis

Speaking on their final day before going into a quiet period ahead of a March 19 policy meeting, they also played down the need for immediate action

International News via Reuters:

European Central Bank policymakers acknowledged on Wednesday the economic risk from surging oil prices and promised swift action if they thought higher inflation was at risk of getting entrenched.

Speaking on their final day before going into a quiet period ahead of a March 19 policy meeting, they also played down the need for immediate action, calling for cool-headed analysis and time to see where energy costs settle.

Oil prices are up nearly 50% since the start of the year on the fallout from the Iran war and financial markets are betting the ECB will be less tolerant than in the past with higher inflation.

“We must be very vigilant,” Bundesbank President Joachim Nagel told Reuters.

“If it becomes apparent that the current energy price increases will translate into broad consumer price inflation in the medium term … the ECB will act decisively.”

ECB READY BUT NO NEED TO ACT JUST YET

Nagel’s French counterpart, Francois Villeroy de Galhau, had a similar message, while acknowledging that the euro zone is now facing higher inflation and lower growth due to the war.

“We will not allow inflation to take hold, we owe this vigilance,” he told French radio station RTL.

“I do not believe, as things stand today, that interest rates need to be raised right now,” he added.

Financial markets now see 30 to 35 basis points of rate hikes this year, a big shift compared to two weeks ago, when no change was expected for the entire year.

Imminent action is unlikely, however, as inflation was running below the ECB’s 2% target in the early months of the year and past projections saw modest undershooting, suggesting some buffer for the ECB.

Luis de Guindos, the ECB’s vice president, however, acknowledged that financial market volatility can amplify shocks to the economy, making it exceptionally difficult to forecast either growth or inflation.

This is why the ECB is likely to look at several scenarios next week, much like it did two years ago when Russia attacked Ukraine, plunging Europe into an energy crisis, he told a conference in Madrid.

With energy prices moving rapidly, economists have struggled to estimate the inflation impact but some have said price growth could accelerate to as high as 2.5% this year.

The ECB generally looks past energy-induced inflation spikes as factors outside monetary policy’s control.

However, the experience of the 2021/2022 shock, when the bank’s delayed response forced it to raise rates at a record pace when inflation reached double digits, could prompt it to act more quickly now, analysts say.

Like her colleagues, ECB President Christine Lagarde also acknowledged the uncertainty and promised the ECB will not let inflation take hold again.

“I can assure you … that we will do everything necessary to keep inflation under control and to ensure that the French, the Europeans, do not experience inflationary increases like those we saw in 2022 and 2023,” she said.

While no policymaker has called for a rate hike already next week, some have openly discussed the possibility of having to tighten policy eventually.

Peter Kazimir, one of the most outspoken policy hawks, said action may be closer than some expect.

“For the time being, we need to stay calm,” he told Bloomberg. “I’d say a reaction by the ECB is potentially closer than many people think.”

Reporting by Balazs Koranyi, Francesco Canepa, Reinhard Becker, Jesus Aguado and Paolo LaudaniEditing by Tomasz Janowski