World news briefs: BoE likely to hold interest rates steady

Probe into Air India Boeing accident continues

Bengaluru — Investigators believe the Air India Boeing Dreamliner had its emergency power generator operating when it crashed last week in Ahmedabad, the Wall Street Journal reported on Wednesday citing people familiar with the probe.

Boeing said it will defer to India’s Aircraft Accident Investigation Bureau for comment. Engine maker GE Aerospace did not respond to a Reuters request for comment. The system, known as the Ram Air Turbine, generates electricity and hydraulic pressure to ensure pilots can control the plane even if both engines fail. Reuters

Navigational error ‘caused oil tankers to collide’

Dubai — The energy ministry of the United Arab Emirates (UAE) said a collision between two oil tankers near the Strait of Hormuz was likely caused by a navigational misjudgement. The Adalynn and Front Eagle oil tankers collided and caught fire on Tuesday 24 nautical miles off the coast of the UAE in the Sea of Oman. No spillage and no injuries to the crew were reported.

In a statement on Wednesday, the ministry cited preliminary information and did not draw any link with an upsurge in electronic interference during the conflict between Iran and Israel. After Iran and Israel began firing missiles at each other last week, interference has disrupted navigation systems near the Strait of Hormuz, a waterway between Iran and Oman that handles about a fifth of the world’s seaborne oil. Reuters

Portugal’s centre-right government takes power

Lisbon — A minority centre-right government formally took power in Portugal on Wednesday after parliament threw out a motion by the small opposition Communist Party calling for rejection of the new administration’s programme.

In its programme, the government promises to continue cutting taxes for the middle class and companies, maintain budget surpluses and have a permanent dialogue with the opposition on issues such as immigration.

The communists, with just three seats in the 230-member parliament, had accused the incoming government in their motion of working “against the interests of workers” and also opposed plans to raise defence spending to 2% of national output. Reuters

BoE likely to hold interest rates steady

London — British inflation slowed as expected in May, pulled down by air fares, which leapt in April, and the correction of a tax data error, though food prices shot up at the fastest rate in more than a year.

Consumer prices rose in annual terms by 3.4% in May compared with 3.5% in April, the statistics office said on Wednesday, just as a Reuters poll of economists and the Bank of England (BoE) had predicted. The central bank is likely to hold interest rates steady on Thursday.

Services price inflation — a crucial metric for the BoE — cooled to 4.7% from 5.4% in April, matching the bank’s forecast. The Reuters poll had pointed to a reading of 4.8%. Reuters

ECB calls for EU to create an AI community

Milan — Top European Central Bank (ECB) policymaker Francois Villeroy de Galhau urged the EU to set up deadlines to speed up progress on financial integration and pooling its savings to sustain investments.

Speaking to students from all over Europe gathered in Milan for the Young Factor conference, Villeroy de Galhau said the EU should create a sort of AI community, like it did for steel and coal after World War 2. If it acted now and upped its game, Europe could still catch up with the US and China on AI. Reuters

Democrats question vaccine contract cancellation

Washington — US Senate Democrats demanded on Wednesday that health secretary Robert F Kennedy Jnr make public the reviews on which his department said it based its decision to cancel a contract for developing a bird flu vaccine.

President Donald Trump's administration last month cancelled a $590m contract awarded to Moderna in January by outgoing president Joe Biden’s administration for the late-stage development of its bird flu vaccine for humans, as well as the right to purchase shots. Reuters

Study warns on rising mortgage payments in EU

Frankfurt — Rising mortgage payments will weigh on consumption in the eurozone for another five years despite a streak of interest rate cuts by the European Central Bank (ECB), a central bank study showed on Wednesday.

The ECB cut borrowing costs for the eighth time in a year this month, seeking to take the brakes off a sluggish eurozone economy. Its key rate is 2%. But mortgage borrowers will be paying a price until 2030 for the ECB’s past fight against high inflation, which saw it jack up that rate from minus 0.5% to 4% in just over a year, according to the ECB study.

This is because a growing share of home loans that had a fixed interest rate at first will reset at a higher level of borrowing costs, resulting in larger monthly payments. Reuters

Namibia holds repo rate to safeguard rand peg

Windhoek — Namibia's central bank left its main interest rate unchanged on Wednesday, saying it wanted to safeguard the local currency’s peg to the rand and that global risks were limiting its ability to ease policy.

It was the second straight meeting at which the bank has kept its repo rate at 6.75% after four rate cuts before that.

“The MPC [Monetary Policy Committee] was wary of the prevailing uncertainty from fundamental global economic and trade policy shifts,” the Bank of Namibia said in a statement. “The escalating Middle East conflict and its potential ramifications for global inflation and growth could not be overlooked.” Reuters