According to the governor of the Central Bank of Nigeria, the Securities and Exchange Commission is responsible for regulating cryptocurrencies. However, the governor said the central bank will collaborate with law enforcement agencies and regulators overseeing the Nigerian crypto sector. The Central Bank’s Change of Heart In a surprise announcement, Yemi Cardoso, governor of the […]
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In this video, Motley Fool contributor Jason Hall dives into Bank of America (BAC -1.23%) and SoFi Technologies (SOFI -1.88%).
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The Bank of England in the City of London, after figures showed Britain’s economy slipped into a recession at the end of 2023.
Yui Mok | Pa Images | Getty Images
LONDON — The Bank of England is widely expected to keep interest rates unchanged at 5.25% on Thursday, but economists are divided on when the first cut will come.
Headline inflation slid by more than expected to an annual 3.4% in February, hitting its lowest level since September 2021, data showed Wednesday. The central bank expects the consumer price index to return to its 2% target in the second quarter, as the household energy price cap is once again lowered in April.
The larger-than-expected fall in both the headline and core figures was welcome news for policymakers ahead of this week’s interest rate decision, though the Monetary Policy Committee has so far been reluctant to offer strong guidance on the timing of its first reduction.
The U.K. economy slid into a technical recession in the final quarter of 2023 and has endured two years of stagnation, following a huge gas supply shock in the wake of Russia’s invasion of Ukraine. Berenberg Senior Economist Kallum Pickering said that the Bank will likely hope to loosen policy soon in order to support a burgeoning economic recovery.
Pickering suggested that, in light of the inflation data of Wednesday, the MPC may “give a nod to current market expectations for a first cut in June,” which it can then cement in the updated economic projections of May.
“A further dovish tweak at the March meeting would be in line with the trend in recent meetings of policymakers gradually losing their hawkish bias and turning instead towards the question of when to cut rates,” he added.
At the February meeting, two of the nine MPC decision-makers still voted to hike the main Bank rate by another 25 basis points to 5.5%, while another voted to cut by 25 basis points. Pickering suggested both hawks may opt to hold rates this week, or that one more member may favor a cut, and noted that “the early moves of dissenters have often signalled upcoming turning points” in the Bank’s rate cycles.
Berenberg expects headline annual inflation to fall to 2% in the spring and remain close to that level for the remainder of the year. It is anticipating five 25 basis point cuts from the Bank to take its main rate to 4% by the end of the year, before a further 50 basis points of cuts to 3.5% in early 2025. This would still mean interest rates would exceed inflation through at least the next two years.
“The risks to our call are tilted towards fewer cuts in 2025 – especially if the economic recovery builds a head of steam and policymakers begin to worry that strong growth could reignite wage pressures in already tight labour markets,” Pickering added.
A key focus for the MPC has been the U.K.’s tight labor market, which it feared risked entrenching inflationary risks in the economy.
January data published last week showed a weaker picture across all labor market metrics, with wage growth slowing, unemployment rising and vacancy numbers slipping for the 20th consecutive month.
Victoria Clarke, U.K. chief economist at Santander CIB, said that, after last week’s softer labor market figures, the inflation reading of Wednesday was a further indication that embedded risks have reduced and that inflation is on a path towards a sustainable return to target.
“Nevertheless, services inflation is largely tracking the BoE forecast since February, and remains elevated. As such, we do not expect the BoE to conclude it is ‘home and dry’, especially with April being a critical point for U.K. inflation, with the near 10% National Living Wage rise and many firms already having announced, and some implemented, their living wage-linked pay increases,” Clarke said by email.
“The BoE needs data on how broad an uplift this delivers to pay-setting, and hard information on how much is passed through to price-setting over the months that follow.”
Santander judges that the Bank could decide it has seen enough data to cut rates in June, but Clarke argued that an August trim would be “more prudent” given the “month-to-month noise” in labor market figures.
This sentiment was echoed by Moody’s Analytics on Wednesday, with Senior Economist David Muir also suggesting that the MPC will need more evidence to be satisfied that inflationary pressures are contained.
“In particular, services inflation, and wage growth, need to moderate further. We expect this necessary easing to unfold through the first half of the year, allowing a cut in interest rates to be announced in August. That said, uncertainty is high around the timing and the extent of rate cuts this year,” Muir added.
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Gluwa, a platform for real-world assets, announced on March 7 its partnership with the Central Bank of Nigeria. The partnership arrangement aims to improve the functionality of the Nigerian central bank’s digital currency and promote financial innovation through blockchain technology. Improving the CBDC’s Utility Gluwa, a real-world assets platform, has entered into a partnership arrangement […]
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Federal Reserve Chair Jerome Powell fist-bumps former Treasury Secretary Steven Mnuchin after a House Financial Services Committee hearing on “Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response” in the Rayburn House Office Building in Washington, D.C., on Dec. 2, 2020.
Greg Nash | Reuters
The $1 billion-plus injection that New York Community Bank announced Wednesday is the latest example of private equity players coming to the need of a wounded American lender.
Led by $450 million from ex-Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital, a group of private investors are plowing fresh funds into NYCB. The move soothed concerns about the bank’s finances, as its shares closed higher on Wednesday after a steep decline earlier in the day.
That cash infusion follows last year’s acquisition of PacWest by Banc of California, which was anchored by $400 million from Warburg Pincus and Centerbridge Partners. A January merger between FirstSun Capital and HomeStreet also tapped $175 million from Wellington Management.
Speed and discretion are key to these deals, according to advisors to several recent transactions and external experts. While selling stock into public markets could theoretically be a cheaper source of capital, it’s simply not available to most banks right now.
“Public markets are too slow for this kind of capital raise,” said Steven Kelly of the Yale Program on Financial Stability. “They’re great if you are doing an IPO and you aren’t in a sensitive environment.”
Furthermore, if a bank is known to be actively raising capital before being able to close the deal, its stock could face intense pressure and speculation about its balance sheet. That happened to Silicon Valley Bank, whose failure to raise funding last year was effectively its death knell.
On Wednesday, headlines around noon that NYCB was seeking capital sent its shares down 42% before trading was halted. The stock surged afterward on the news that it had successfully raised funding.
“This is the unfortunate lesson from SVB,” said an advisor on the NYCB transaction. “With private deals, you can talk for a while, and we almost got to the finish line before there was any publicity.”
Mnuchin reached out to NYCB directly to offer support amid headlines about the duress it was under, according to a person with knowledge of the matter. Mnuchin isn’t just a former Treasury secretary. In 2009, he led a group that bought California bank IndyMac out of receivership. He ultimately turned the bank around and sold it to CIT Group in 2015.
Now, with the assumption that Mnuchin and his co-investors have seen NYCB’s deposit levels and capital situation — and are comfortable with them — the bank has much more time to resolve its issues. Last week, NYCB disclosed “material weaknesses” in the way it reviewed its commercial loans and delayed the filing of a key annual report.
“This buys them a ton of time. It means the FDIC isn’t coming to seize them on Friday,” Kelly said. “You have a billion dollars in capital and a huge endorsement from someone who has seen the books.”
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Transitioning from the middle class to a wealthier status involves more than just an increase in income; it encompasses a broad range of financial behaviors, assets and mindsets. Key indicators of this transition include diversifying income streams beyond a primary job, such as through rental income; dividends from investments; or side business profits. This diversification strategy is crucial for building wealth and suggests a move toward financial independence.
Investing in assets like real estate or stocks that consistently contribute to your income signifies a departure from middle-class financial limitations. The reduction or absence of debt, coupled with the growth of assets that generate passive income, marks a significant step towards accumulating wealth. This transition is often evidenced by a substantial increase in net worth, sometimes reaching into the millions, as these assets grow over time.
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A net worth exceeding $2 million is frequently cited as a threshold for wealth, though this figure can vary based on individual circumstances and lifestyle choices. True wealth encompasses more than just a high income or substantial net worth; it includes financial freedom and the capacity to maintain a desired standard of living without compromising financial security.
Shifting towards passive income is a critical step for those moving from the middle class towards greater wealth. It involves creating income sources that do not require active daily effort, such as rental properties, dividends from investments or earnings from a business that does not demand constant hands-on management.
This strategy is not merely about augmenting your income; it’s a fundamental change in how you generate wealth, indicating a move towards financial independence. Passive income allows for the accumulation of wealth over time, offering a buffer that can lead to a more secure financial future and is indicative of a strategic approach to achieving long-term financial goals.
Creating a successful business or venture that consistently generates income is a clear indication of moving towards greater wealth. This success is usually supported by consistent growth in savings and investments, underscoring the importance of a solid financial foundation and the strategic accumulation of wealth.
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Trending: Can you guess how many Americans successfully retire with $1,000,000 saved? The percentage may shock you.
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Having a team of financial advisers, accountants and legal advisors is crucial for those transitioning from the middle class to richer statuses. These professionals provide strategies to optimize investments and minimize tax liabilities, facilitating greater wealth accumulation and offering guidance on navigating the complexities of financial growth.
A significant change in lifestyle and mindset towards prioritizing financial success, viewing money and time from a different perspective and the ability to enjoy leisure without financial concern are hallmarks of this transition. Such shifts reflect a deeper, strategic approach to wealth management, focusing on long-term security over immediate gains.
Understanding and employing tax-efficient strategies, along with investments in additional real estate beyond a primary residence, showcase financial sophistication. Entrepreneurial initiatives and the creation of multiple income streams further signal a proactive approach to wealth building, demonstrating a comprehensive shift in managing and sustaining wealth.
The journey from middle class to a wealth is marked by a series of strategic decisions and changes in financial behavior, asset management and mindset. This transition reflects not just an improvement in financial standing but a fundamental shift in the approach to accumulating and managing wealth, emphasizing the importance of diversification, investment and strategic planning in achieving financial independence and security.
Even if you’re not yet rich by societal standards, consulting with a financial adviser can be an important step in reaching your own personal financial goals. A financial adviser can provide tailored advice that aligns with your unique circumstances, aspirations and risk tolerance. Whether it’s building an emergency fund, planning for retirement, investing in the stock market or saving for a home, a financial adviser can help you navigate the complexities of financial planning, ensuring you’re on the right path to achieving your personal version of financial success.
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*This information is not financial advice, and personalized guidance from a financial adviser is recommended for making well-informed decisions.
Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications including Zacks, The Nest and eHow. She is not a licensed financial adviser, and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes the information contained herein is reliable and derived from reliable sources, there is no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information.
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The battle against rising prices is not over, one of the newest top Federal Reserve officials said Monday.
“When it comes to too-high inflation, I believe we are not out of the woods yet,” Kansas City Fed President Jeff Schmid said in his first public speech since joining the central bank six months ago.
Progress on inflation has been encouraging but has “largely” been driven by reductions in energy and goods prices, he said.
That might not last.
Residents of the Kansas City Fed district know that energy prices “are anything but stable,” Schmid said. And turmoil in the Middle East could put pressure on supply chains and affect the prices of goods.
That means further progress on inflation might have to come from lower prices for services, Schmid said. But the January CPI data showed that prices of services “continue to rise briskly amid still-tight labor markets and elevated wage growth,” he noted.
Schmid started his career as a Fed bank examiner in 1981 and went on to serve as CEO of several banks. He will be a voting member of the Fed’s interest-rate committee in 2025.
His caution about inflation fit with recent remarks from other top Fed officials.
“Recent Fedspeak has sent a clear signal that, although the policy rate has likely peaked and rate cuts are expected to commence this year, officials are not in a rush to lower rates,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank.
Luzzetti floated the idea that the Fed would cut in a “two-stage process,” with a few quarter-point cuts followed by a potentially lengthy pause.
Many economists think the Fed will delay their first cut until June. At the start of the year, the betting in financial markets had been that the first cut would come in March.
Stocks
DJIA
SPX
closed lower Monday and the yield of the 10-year Treasury note
BX:TMUBMUSD10Y
inched down to 4.281%.
Vella Finance, a Nigerian fintech startup, was recently bought by the microfinance bank Carbon. The acquisition of the fintech startup paves for Carbon to launch a new banking platform targeting Nigerian businesses. New Business to Leverage Artificial Intelligence The Nigerian microfinance bank, Carbon, has reportedly acquired the fintech firm Vella Finance for an undisclosed amount. […]
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