Fed officials remain committed to wrestling America’s rapid inflation lower, and they have raised interest rates at the quickest pace since the 1980s to try to slow the economy and bring supply and demand into balance — making supersize rate moves of three-quarters of a percentage point at each of their past two meetings. Another big adjustment will be up for debate at their next meeting in September, policymakers have said.

But investors interpreted July’s unexpectedly pronounced inflation slowdown as a sign that policymakers could take a gentler route, raising rates a half-point next month. Stocks soared more than 2 percent on Wednesday, as Wall Street bet that the Fed might become less aggressive, which would decrease the chances that it would plunge the economy into a recession.

“It was as good as the markets and the Fed could have hoped for from this report,” said Aneta Markowska, chief financial economist at Jefferies. “I do think it removes the urgency for the Fed.”

Still, officials who spoke on Wednesday remained cautious about inflation. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, called the report the “first hint” of a move in the right direction, while Charles Evans, president of the Federal Reserve Bank of Chicago, said that it was “positive” but that price increases remained “unacceptably high.”

Policymakers have been hoping for more than a year that price increases will begin to cool, only to have those expectations repeatedly dashed. Supply chain issues have made goods more expensive, Russia’s invasion of Ukraine sent commodity prices soaring, a shortage of workers pushed wages and service prices higher and a dearth of housing has fueled rising rents.

toward $4 in July after peaking at $5 in June, based on data from AAA. That decline helped overall inflation to cool last month. The trend has continued into August, which should help inflation to continue to moderate.

But it is unclear what will happen next. The U.S. Energy Information Administration expects that fuel costs will continue to come down, but geopolitical instability and the speed of U.S. oil and gas production during hurricane season, which can take refineries offline, are wild cards in that outlook.

declined in July, perhaps in part because borrowing costs rose. Mortgage rates have increased this year and appear to be weighing on the housing market, which could be helping to drive down prices for appliances.

slow hiring. Wages are still rising rapidly, and, as that happens, so are prices on many services. Rents, which make up a chunk of overall inflation and are closely linked to wage growth, continue to climb rapidly — which is concerning, because they tend to change course only slowly.

Rents of primary residences climbed 0.7 percent in July from the prior month, and are up 6.3 percent over the past year. Before the pandemic, that measure typically climbed about 3.5 percent annually.

Those forces could keep inflation undesirably rapid even if supply chains unsnarl and fuel prices continue to fall. The Fed aims for 2 percent inflation over time, based on a different but related inflation measure.

“The Covid reopening and revenge travel pressures have eased — and are probably going to continue easing,” said Laura Rosner-Warburton, senior U.S. economist at MacroPolicy Perspectives. But she also struck a note of caution, adding: “Under the hood, we’re still seeing pressures in rent. There’s still sticky inflation here.”

And given how high inflation has been for more than a year now, Fed policymakers will avoid reading too much into a single report. Inflation slowed last summer only to speed up again in fall.

“We might see goods inflation and commodity inflation come down, but at the same time see the services side of the economy stay up — and that’s what we’ve got to keep watching for,” Loretta Mester, president of the Federal Reserve Bank of Cleveland, said during a recent appearance. “It can’t just be a one month. Oil prices went down in July; that’ll feed through to the July inflation report, but there’s a lot of risk that oil prices will go up in the fall.”

Ms. Mester said that she “welcomes” a slowdown in some types of prices, but that it would be a mistake to “cry victory too early” and allow inflation to continue without taking necessary action.

For many Americans who are struggling to adjust their lifestyles to rapidly climbing costs at the grocery store and dry cleaners, an annual inflation rate that is still more than four times its normal speed is unlikely to feel like a big improvement, even as lower gas prices and rising pay rates do offer some relief.

Stephanie Bailey, 54, has a solid family income in Waco, Texas. Even so, she has been cutting back on meals at local Tex-Mex restaurants and new clothes because of the climbing prices, which she sees “everywhere.” At Starbucks, she opts for cold, noncoffee drinks, which in some cases are cheaper.

Her son, who is in his 20s, has moved back in with his parents. Rent had become out of reach on his salary working at a vitamin manufacturer. He is now teaching at a local high school.

“It’s just so expensive, with housing,” Ms. Bailey said. “He was having a hard time making ends meet.”

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Analysis: East Europe’s party is over as double-digit inflation bites

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ESZTERGOM, Hungary, Aug 5 (Reuters) – In the weeks that followed Russia’s invasion of Ukraine, western Europe’s big economies began to falter. But further east it was still boom-time thanks to double-digit wage hikes and generous state handouts in some countries.

Not any more.

A sharp slowdown in retail sales and plunging confidence indicators show that the cost of living crisis has caught up with Europe’s eastern wing, where people now face a harsh reality check as stubborn double-digit inflation erodes their incomes while food price rises top 15%-22% and energy costs soar.

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As household consumption takes a hit, analysts are downgrading their GDP forecasts and the risk of a Europe-wide recession looms.

Families have started to tighten their belts. Poles are taking shorter holidays, Czechs are saving on restaurant bills while some seek second jobs, and in Hungary – where food inflation alone was an annual 22.1% in June – people are cutting down on grocery bills and purchases of consumer durables as a slide in the forint currency pushes up import prices.

“I went into the bakery one day and a loaf of bread cost 550 forints. I go in the next day and it costs 650. For God’s sake!”, exclaimed Lajos, a 73-year-old man shopping at a market in the northern city of Esztergom on the Danube river.

Standing by his bicycle, grey-bearded Lajos, who did not give his family name, said the surge in food prices had consumed some of his monthly pension and he would not be able to pay higher utility bills, which will rise after the government last month scrapped price caps for what it called higher-usage households.

So he is making his own plans.

“I can heat with gas but also wood … as I have a tile-stove. So with my wife we will move into one room, heat up the stove, put on some warm sweaters and watch TV like that.”

Across Hungary, retail sales growth (HURETY=ECI) slowed to an annual 4.5% in June from 10.9% in May, with furniture and electronic goods sales down by 4.3%, suggesting the impact of huge tax breaks and fiscal transfers from Prime Minister Viktor Orban’s government before April’s elections has now faded.

Polish retail sales growth also slowed to an annual 3.2% in June from 8.2% in May, while Czech adjusted retail sales excluding cars and motorcycles dropped by 6.0% year-on-year in June after a fall of 6.6% in May, data showed on Friday.

“Households have reacted to the rising cost of living in a meaningful way, and the consumption of things has started to slow,” said Peter Virovacz, an analyst at ING in Budapest.

According to a survey by the National Bank of Hungary on Friday, commercial banks expect demand for loans to decline and credit conditions to tighten in the second half.

BELT-TIGHTENING

The slowdown in domestic demand, rising interest rates, government spending cuts and companies’ rising costs look set to dampen economic growth in Central Europe in the second half of this year and slow them down sharply in 2023.

Citigroup said Hungary’s economy could grow by close to 5% in 2022 but that there were downside risks to its 1% forecast for next year.

“The risk of prolonged high energy prices keeping inflation in double-digit territory even in 2023 and our updated Euro Area in-house forecasts point towards downside risks,” it said.

The Hungarian central bank still projects 2.0%-3.0% growth for 2023, and it will release new forecasts in September.

The Polish economy is expected to grow by 3.8% this year and 3.2% in 2023, according to government projections.

The Czech central bank, the first to call a halt to its rate-hike cycle on Thursday, predicts recession at the turn of the year as it sees the economy contracting 0.4% in the fourth quarter of 2022 and 1% in the first quarter of 2023.

“Our base scenario includes a mild recession – a technical recession – we have two quarters in a row with a quarterly decline there… That would be a healthy recession, which also allows for cutting inflation,” Governor Ales Michl said.

While the summer is still expected to see a boom in the tourism sector, Poles have started to save on trips according to travel website Noclegi.pl.

“We can see that what characterizes this season is the shortening of trips, on average by one day, and postponing the booking until the last moment,” said Natalia Jaworska, an expert at Noclegi.pl. Poles have also begun to save on food.

Data from various restaurant payment services, like Sodexo, have shown falling spending in restaurants in the Czech Republic as well. The STEM polling agency’s latest survey in June found 80% of Czech households were cutting back or limiting their purchases because of fast-rising energy bills.

Czech consumer confidence hit a new low in July, according to the statistics office’s monthly survey, while a survey by think-tank GKI showed the Hungarian consumer confidence index in July plunged to its lowest level since April 2020 during the first wave of the COVID-19 pandemic.

Martin Hulovec, a 43-year-old Czech film producer, said he was not worried about his income right now, but he was less optimistic about the future.

“The hard times have not arrived yet for me to deal with it immediately… but it will come,” Hulovec said.

“I will certainly seek more energy savings… I will definitely not buy new stuff for the kids, clothing or sport equipment. You can find that secondhand for half the price.”

And he too will be switching on the heating less when winter comes.

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Reporting and writing by Krisztina Than, Addditional repoting by Jason Hovet and Robert Muller in Prague, and Anna Wlodarczak-Semczuk in Warsaw, Editing by Hugh Lawson

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U.S. hotels spin travel demand into gold as airlines struggle

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A man exits the Four Seasons Hotel, which was later clarified by President Donald Trump’s official Twitter channel as not the Four Seasons location mentioned for the legal team’s press conference, in Philadelphia, Pennsylvania, U.S. November 8, 2020. The press conference was subsequently held at the Four Seasons Total Landscaping company in Philadelphia. REUTERS/Mark Makela

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Aug 5 (Reuters) – Staff shortages, airport chaos and higher fuel costs have caused earnings at U.S. airlines like JetBlue Airways to land below analysts’ expectations while hotel chains including Marriott International are reporting double-digit profit growth.

Despite cutbacks in other categories due to recession worries, consumers eager to travel after the pandemic continue to book flights and hotels. Hotels have been able to turn this demand into increased profitability far more effectively than airlines.

David Tarsh, spokesperson for travel data analytics company Forward Keys, said the problems faced by airlines and airports are harder to resolve than those in the lodging industry.

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“In the case of labor in hospitality, your shortage is probably more with less-skilled workers than in the case of the aviation industry,” he said. “If you’re short of cabin crew and you’re short of security people in the airport, you can’t just increase wages and suddenly fill these roles. People also need to be trained.”

U.S. carriers are struggling to offset higher costs such as fuel even as booming travel demand has given them strong pricing power.

JetBlue Airways Corp (JBLU.O) on Tuesday reported a quarterly adjusted loss of 47 cents per share compared to analysts’ predictions of an 11-cent loss.

United Airlines Holdings Inc (UAL.O), American Airlines Group Inc (AAL.O) and Delta Air Lines Inc last month reported quarterly profits below analysts’ expectations.

Meanwhile, hotel bookings are surging. Marriott International Inc (MAR.O) on Tuesday topped Wall Street estimates for quarterly revenue and profits, helped by higher occupancy levels and room rates as travelers booked more group travel and longer stays. read more

Last month, Hilton Worldwide Holdings (HLT.N) saw profit rise above pre-pandemic levels. On Wednesday, MGM Resorts International (MGM.N) reported profit 25% higher than in the second quarter of 2019 and said staff shortage problems seemed to be easing.

“Generally speaking, we’re in decent shape. We are not running around with our hair on fire, if you will, anymore,” said MGM Resorts CEO Bill Hornbuckle in Wednesday’s earnings call.

Host Hotels & Resorts Inc (HST.O), which operates hotels under the Four Seasons, Grand Hyatt and Ritz Carlton brands, reported profits of 36 cents per share, higher than analysts’ predictions.

“We’re up into the double digits in terms of total revenue (growth) for Thanksgiving. And actually, for Christmas, we are seeing a solid pickup as well,” said Host CEO Jim Risoleo on a call for analysts on Thursday.

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Reporting by Gigi Zamora; Editing by Anna Driver and Cynthia Osterman

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U.S. Economy Shows Another Decline, Fanning Recession Fears

A key measure of economic output fell for the second straight quarter, raising fears that the United States could be entering a recession — or perhaps that one had already begun.

Gross domestic product, adjusted for inflation, fell 0.2 percent in the second quarter, the Commerce Department said Thursday. That drop followed a decline of 0.4 percent in the first quarter. The estimates for both periods will be revised in coming months as government statisticians get more complete data.

News of the back-to-back contractions heightened a debate in Washington over whether a recession had begun and, if so, whether President Biden was to blame. Economists largely say that conditions do not meet the formal definition of a recession but that the risks of one are rising.

a bid to tame inflation, and the White House has argued that the slowdown is part of an inevitable and necessary transition to sustainable growth after last year’s rapid recovery.

“Coming off of last year’s historic economic growth — and regaining all the private-sector jobs lost during the pandemic crisis — it’s no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation,” Mr. Biden said in a statement issued after the release of the G.D.P. report. “But even as we face historic global challenges, we are on the right path, and we will come through this transition stronger and more secure.”

rising consumer prices and declining spending, the American economy is showing clear signs of slowing down, fueling concerns about a potential recession. Here are other eight measures signaling trouble ahead:

“When you’re skating on thin ice, you wonder about what it would take to push you through, and we’re on thin ice right now,” said Diane Swonk, the chief economist for KPMG.

Matthew Martin, 32, is paying more for the butter and eggs that go into the intricately decorated sugar cookies he sells as part of a home business. At the same time, his sales are falling.

“I guess people don’t have as much money to toss at cookies right now,” he said.

Mr. Martin, a single father of two, is trying to cut back on spending, but it isn’t easy. He has replaced trips to the movies with day hikes, but that means spending more on gas. He is hoping to sell his house and move into a less expensive place, but finding a house he can afford to buy has proved difficult, especially as mortgage rates have risen. He has thought about finding a conventional 9-to-5 job to pay the bills, but he would then need to pay for child care for his 4-year-old twins.

“Honestly, I’m not 100 percent sure what I’m going to do,” he said.

defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months,” and it bases its decisions on a variety of indicators — usually only months after the fact.

Some forecasters believe a recession can be avoided, if inflation cools enough that the Fed can slow interest rate increases before they take too much of a toll on hiring and spending.

The economy still has important areas of strength. Job growth has remained robust, and, despite a recent uptick in filings for unemployment insurance, there is little sign of a broad increase in job losses.

Households, in the aggregate, are sitting on trillions of dollars in savings built up earlier in the pandemic, which could allow them to weather higher prices and interest rates.

“What drives the U.S. consumer is the healthy labor market, and we should really focus on job growth to capture the turning point in this business cycle,” said Blerina Uruci, an economist at T. Rowe Price. The Labor Department will release data on July’s hiring and unemployment next week.

The lingering effects of the pandemic are making the economy’s signals harder to interpret. Americans bought fewer cars, couches and other goods in the second quarter, but forecasters had long expected spending on goods to fall as consumers shifted back toward prepandemic spending patterns. Indeed, economists argue that a pullback in spending on goods is needed to relieve pressure on overstretched supply chains.

At the same time, spending on services accelerated. That could be a sign of consumers’ resilience in the face of soaring airfares and rental car rates. Or it could merely reflect a temporary willingness to put up with high prices, which will fade along with the summer sun.

“There is going to be this element of, ‘We haven’t had a summer vacation in three years, so we’re just going to take one, no matter how much it costs,’” said Aditya Bhave, a senior economist for Bank of America. “The question is what happens after the summer.”

Avital Ungar is trying to interpret the conflicting signals in real time. Ms. Ungar operates a small business running food tours for tourists and corporate groups in San Francisco, Los Angeles and New York.

When restaurants closed and travel stopped early in the pandemic, Ms. Ungar had no revenue. She made it through by offering virtual happy hours and online cooking classes. When in-person tours came back, business was uneven, shifting with each new coronavirus variant. Ms. Ungar said demand remained hard to predict as prices rise and the economy slows.

“We’re in two different types of uncertainty,” she said. “There was the pandemic uncertainty, and then there’s the economic uncertainty right now.”

In response, Ms. Ungar has shifted her focus to higher-end tours, which she believes will hold up better than those aimed at more price-sensitive customers. And she is trying to avoid long-term commitments that could be difficult to get out of if demand cools.

“Every annual plan I’ve done in the past three years has not happened that way,” she said. “It’s really important to recognize that what worked yesterday isn’t going to work tomorrow.”

Lydia DePillis contributed reporting.

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The Hunt Is On for ‘War Trophies’ in Ukraine

KYIV — When Ihor Sumliennyi, a young environmental activist, arrived at the site of a recent missile strike, the rubble had barely stopped smoking.

Police officers guarded the street. People who had lived in the smashed apartment building stared in disbelief, some making the sign of the cross next to him. He started poking around.

And then, bam! His eyes lit up. Right in front of him, lying near the sidewalk, was exactly what he was looking for: a mangled chunk of shrapnel, a piece of the actual Russian cruise missile that had slammed into the building.

Serhii Petrov, a well-known artist working in Lviv. He’s now incorporating spent bullet cartridges into the masks he makes.

As he handled one, he mused, “Maybe it was someone’s last bullet.”

At a charity auction in Lviv on Sunday, Valentyn Lapotkov, a computer programmer, paid more than $500 for an empty missile tube that had been used, the auctioneers said, to blow up a Russian armored personnel carrier. He said that when he touched it he felt “close to our heroes.”

Memorializing the war, even when it’s likely far from over, is a way to show solidarity with the soldiers and those who have suffered. One of Kyiv’s biggest museums recently staged an exhibition of war artifacts collected since the Russians invaded in February. The rooms are full of gas masks, missile tubes and charred debris. The message is clear: See, this is what real war really looks like.

Fridays for Future movement, organizing social media campaigns against fossil fuels, and during the hundreds of video calls he makes, he shows off his war trophies. He also sends some out of the country with female activists to “go on tour” (he can’t travel himself, because of Ukraine’s ban on military-age men leaving the country).

Dominika Lasota, a climate justice activist from Warsaw. “I automatically started to laugh at it, in shock, but then realized how dystopian this moment was.”

“Ihor seemed to be all chill about it,” she added of Mr. Sumliennyi. “He actually showed that piece of the bomb with pride — he was smiling.”

UAID foundation, a volunteer network that, among the many things it’s doing, has sold more than 15 pieces of war debris, including several missile and rocket tubes used by the Ukrainian military that are big hits. All told, the war debris has netted more than $4,000, which the foundation spends on protective vests, medicine and other supplies for Ukrainian troops.

“We are taking things used to kill people to now save lives,” she said.

She said that one young Ukrainian soldier fighting in the Donbas region has been a huge help in finding things from the front lines. He has jumped out of trenches even as Russian shells were exploding around him and fellow soldiers were yelling at him to take cover. But, she said, he’s close to a bunch of volunteers and yells back, “I have to go. My friends need this stuff!”

Bucha, a Kyiv suburb where Russian troops slaughtered hundreds of civilians, to take photos for a social media campaign about the connection between fossil fuels and Russia’s war machine.

Just by chance, they stumbled into a backyard where they found a Russian military jacket and the pair of black boots (size 10). They remain among his prized items.

“We didn’t go to Bucha looking for this,” he said. “We just got lucky.”

Diego Ibarra Sanchez contributed reporting from Lviv and Oleksandra Mykolyshyn from Kyiv.

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Lufthansa cancels over 1,000 flights due to ground staff walkout

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Empty counters of German airline Lufthansa at Frankfurt Airport are pictured during a strike of security staff at various German airports, March 15, 2022. REUTERS/Timm Reichert/File Photo

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BERLIN, July 26 (Reuters) – Deutsche Lufthansa (LHAG.DE) said it was cancelling more than 1,000 flights ahead of a one-day walkout by ground staff scheduled for Wednesday, just as families across Germany head off on their summer holidays.

Strikes and staff shortages have already forced airlines including Lufthansa to cancel thousands of flights and caused hours-long queues at major airports, frustrating holidaymakers keen to travel after COVID-19 related lockdowns. read more

Germany’s flagship carrier has cancelled 678 flights at its Frankfurt hub, most of which were scheduled for Wednesday, and 345 flights at Munich, Lufthansa said on Tuesday.

More than 130,000 passengers are affected, Lufthansa said, adding that there could be a few more cancellations and delays on Thursday and Friday, after the end of the strike called by labour union Verdi in pursuit of a 9.5% pay claim. read more

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Reporting by Maria Sheahan, editing by Rachel More

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Judge nixes arrest warrant for Republican county clerk after bond breach

Republican Secretary of State candidate for Colorado, Tina Peters, a county clerk and election denier who’s been indicted on criminal charges for tampering with voting machines, sings the National Anthem at her primary election night rally in Sedalia, Colorado, U.S., June 28, 2022. REUTERS/Kevin Mohatt/File Photo

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DENVER, July 15 (Reuters) – A Colorado judge on Friday nixed an arrest warrant for a county clerk who was indicted on felony charges of tampering with voting equipment and then lost a bid for the Republican nomination to Colorado’s top election-management post.

Mesa County District Judge Matthew Barrett said he was giving Tina Peters a break because her lawyer took responsibility for not relaying to his client an order barring her from traveling out of state without the court’s approval. The ban was part of the terms of her bail bond that permitted her pre-trial release from jail in March.

But Barrett warned Peters, who flew to Las Vegas this week to speak at a symposium of conservative law enforcement officers, during the 45-minute hearing that he would not be so lenient should it happen again.

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“She is a flight risk,” Barrett said. “She has resources and access to private jets.”

In March, Peters was indicted by a Colorado grand jury on election tampering charges stemming from an alleged breach of Mesa County’s voting equipment. She has been barred by Colorado’s secretary of state from overseeing elections in the western Colorado county this year.

According to the 10-count indictment, which included charges of criminal impersonation, conspiracy, identity theft and official misconduct, Peters gave unauthorized personnel access to the county’s election computer server.

The case gained national attention in part because Peters was outspoken in her support for former President Donald Trump’s baseless claims that the 2020 presidential election was rigged against him.

Peters has denied any wrongdoing and blamed her legal troubles on her political adversaries, including Colorado Secretary of State Jena Griswold, a Democrat.

Undaunted by her indictment, Peters sought the Republican nomination to challenge Griswold, who is up for re-election in November. But Peters, who was permitted to travel outside Colorado while she was a candidate for statewide office, lost the Republican primary last month.

Peters is due back in court on Aug. 5.

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Reporting by Keith Coffman in Denver; Editing by Alexandra Ulmer and Leslie Adler

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Technical problem forces IndiGo plane to land in Karachi

A logo of IndiGo Airlines is pictured on passenger aircraft on the tarmac in Colomiers near Toulouse, France, July 10, 2018. REUTERS/Regis Duvignau/File Photo

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NEW DELHI, July 17 (Reuters) – India’s biggest airline, IndiGo, said on Sunday it had diverted a plane to Karachi in neighbouring Pakistan due to a “technical defect”, the second such incident for an Indian carrier involving an unscheduled landing in less than two weeks.

The flight was meant to go to Sharjah in the United Arab Emirates from the southern city of Hyderabad. It was not immediately clear when the incident occurred.

“IndiGo flight 6E-1406, operating from Sharjah to Hyderabad was diverted to Karachi. The pilot observed a technical defect,” IndiGo said in a statement to the media.

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“Necessary procedures were followed and as a precaution the aircraft was diverted to Karachi.”

IndiGo was dispatching an additional flight to Karachi to bring passengers back to Hyderabad, it said.

SpiceJet said on July 5 a Boeing 737 aircraft from New Delhi to Dubai made an emergency landing in Karachi due to a fuel indicator light malfunctioning, prompting the airlines watchdog to issue a warning notice. read more

India has seen a strong revival in domestic and international air travel in the months following lifting of COVID restrictions.

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Reporting by Aditi Shah and Neha Arora; Editing by Rupam Jain and William Mallard

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How Republican-led states are targeting Wall Street with ‘anti-woke’ laws

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WASHINGTON, July 6 (Reuters) – Republican-led states have unleashed a policy push to punish Wall Street for taking stances on gun control, climate change, diversity and other social issues, in a warning for companies that have waded in to fractious social debates.

Abortion rights are poised to be the next frontier.

This year there are at least 44 bills or new laws in 17 conservative-led states penalizing such company policies, compared with roughly a dozen such measures in 2021, according to a Reuters analysis of state legislative agendas, public documents and statements.

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While some of the individual moves have been reported, the scale and speed at which such “anti-woke” state laws and policies are ballooning and the challenges they are creating for Wall Street companies is detailed here for the first time.

The Merriam-Webster dictionary defines “woke” as being aware of and actively attentive to issues of racial and social justice, but it is often used by conservatives to disparage progressive policies. The term has gained traction as America has become more politically polarized over issues from racial justice and LGBTQ rights to the environment and COVID-19 vaccines.

Reuters counted bills considered and state laws passed in 2021 and 2022, although some state officials are also using executive powers to punish Wall Street.

The growing restrictions show how America’s culture wars are creating new risks for some of the most high-profile U.S. companies, forcing them to balance pressure from workers and investors to take stances on hot-button issues with potential backlash from conservative policymakers.

West Virginia and Arkansas this year, for example, stopped using BlackRock Inc (BLK.N) for certain services, due to its climate stance, according to West Virginia’s Republican treasurer Riley Moore and Arkansas media reports.

In Texas, JPMorgan Chase & Co (JPM.N), Bank of America (BAC.N) and Goldman Sachs (GS.N) have been sidelined from the municipal bond market due to laws passed last year barring firms that “boycott” energy companies or “discriminate” against the firearms industry from doing new business with the state.

In many cases, the measures target a range of companies, restricting their ability to conduct state business. But financial institutions have been primary targets due to the pivotal roles they play in the economy and the early stances many took on such issues as fossil fuel and firearms financing.

Republicans say the policies of such companies deprive legitimate businesses of capital.

“They’re using the power of their capital to push their ideas and ideology down onto the rest of us,” said Moore. He spearheaded a law, passed in March, refusing business to banks that “boycott” fossil fuel companies and has rallied officials from 16 other states to promise to adopt similar policies. read more

With several major financial companies stepping in to cover travel costs for employees seeking abortions after the Supreme Court last month reversed federal abortion rights, the Republican push to sanction Wall Street for “woke” stances is likely to grow. read more

Republican Texas lawmaker Briscoe Cain said he plans legislation to outlaw such coverage and prohibit companies that provide it from receiving any Texas state business or contracts.

“No corporation doing business in Texas will be allowed to subsidize abortions or abortion travel in any manner,” Cain told Reuters in an email.

NO BOYCOTTS

The new curbs will make it harder for financial firms to do a range of state business, from bond underwriting to managing state funds, depository accounts and government credit cards, according to interviews with more than a dozen industry sources, bank lobbyists and lawyers.

Such contracts can be worth several million dollars each, public procurement data shows.

JPMorgan, for example, underwrote $3.2 billion worth of Texas muni bonds last year, compared with $210 million so far this year, Refinitiv data shows. Bank of America, which underwrote $3.7 billion in Texas muni bonds last year, has done none this year.

Some smaller firms, including Ramirez & Co Inc and Loop Capital Markets, meanwhile, have jumped more than 10 places so far this year in the Texas muni bond market bookrunner rankings, based on deal values.

To be sure, some Democratic-led states are also looking to tilt the scales. Washington state floated a “climate resiliency fee” for institutions that fund fossil fuel projects. California is considering a bill that would stop its pension plans, the country’s largest, from investing in fossil fuel companies.

But states led by Democrats are not pursuing as many punitive measures, according to the review and sources.

“We’re going to see a lot more of these statutes on one side of the coin or the other,” said John Crossley, a partner at K&L Gates who focuses on energy. “It’s going to make it more and more difficult for people to operate in these markets.”

Spokespeople for the above financial firms declined to comment or did not respond to requests for comment.

Financial firms say they aim to provide comprehensive healthcare benefits. They also argue government restrictions will drive up costs for Americans, and they dispute the characterization of their policies as boycotts.

BlackRock, the world’s largest asset manager and a frequent target of Republican attacks, for example, has told Texas officials that while it has joined various efforts to cut greenhouse gas emissions, it supports fossil fuel companies. read more

“The economy and financial system are best served when banks of all sizes can make their own banking and lending decisions about how to meet the needs of their communities based on their business model and risk tolerance,” said Joseph Pigg, senior vice president at the American Bankers Association.

ANTI-WOKE PUSH

The review shows “anti-woke” measures are gaining ground not only in traditional conservative strongholds such as Texas and Kentucky but also in so-called purple states – whose voters swing Democratic or Republican – such as Arizona and Ohio.

The issues such measures target are also mushrooming.

Guns and energy were the focus of the roughly dozen state laws and bills last year andof at least 30 legislative measures this year.

But this year there were also more than a dozen bills relating to social and other issues, including “divisive concepts” like critical race theory – an academic theory that racial bias is baked in to U.S. laws and institutions – mandatory COVID-19 vaccines, or the use of “social credit scores,” the Reuters analysis shows.

The latter is a theory that companies may take into account an individual’s political leanings when providing and pricing services.

In April, for example, Florida made it illegal for companies to require training that might make staff feel “guilt” or “anguish” because of past actions by members of the same race. Unveiling the bill, Florida Governor Ron DeSantis flagged Bank of America as one company conducting such “woke” training.

A bank spokesman said the materials were offered to hundreds of companies by a nonprofit and were not part of the bank’s training materials.

While the measures reviewed do not target corporate abortion policies, Cain said he expected other Republican-led states to pursue business restrictions on companies with such policies.

WALL STREET DIVISIONS

The financial industry is struggling to repel the onslaught, the sources said. Its trade groups are mainly registered to lobby the federal government, while state-based groups are not always aligned with Wall Street companies’ priorities.

Moore, for example, said West Virginia’s community banks supported his measures. The West Virginia Bankers Association declined to comment. The Texas Bankers Association said the group had not opposed the Texas curbs because its members were not in “consensus.”

Wall Street’s adversaries, on the other hand, are united.

Galvanized by what they say are efforts by Democrats in the federal government to push “woke” policies, oil and gas, firearms and conservative groups, including the Texas Public Policy Foundation and the National Shooting Sports Foundation (NSSF), are successfully pushing such curbs, according to industry sources and advocates. read more

“Banks should stay out of making policy choices,” said Lawrence Keane, general counsel at the NSSF, which advocated for the Texas law targeting lenders’ firearms policies.

The American Petroleum Institute, a major energy group, said it opposes discriminatory policies toward the industry.

Jason Isaac, a former Texas lawmaker who leads energy advocacy for the Texas Public Policy Foundation and helped craft the Texas fossil-fuel law, said he was discussing similar laws with other states, adding: “This woke political ideology will continue unless we get it in check.”

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Reporting by Pete Schroeder in Washington
Additional reporting by Chris Prentice in Washington and Ross Kerber in Boston
Editing by Michelle Price, Paritosh Bansal and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

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