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The gender pay gap and longer lifespans relative to men make it challenging for many women to save enough for retirement, experts said Tuesday at CNBC’s Women & Wealth event.
However, there are ways women can try to boost savings.

Momo Productions | Stone | Getty Images

Women face tough financial prospects in retirement.
About 50% of women ages 55 to 66 have no personal retirement savings, a higher share than men (47%), according to U.S. Census Bureau data. Those who do have retirement savings are less likely to have $100,000 or more (22% vs. 30%).

“The picture is pretty bleak for women” who don’t save enough for retirement, Cindy Hounsell, founder and president of the Women’s Institute for a Secure Retirement, said Tuesday at CNBC’s Women & Wealth event.

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Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

Women’s retirement savings challenges

The typical woman earns a lower salary than men: about 82 cents for every dollar, according to the Pew Research Center. That gender wage gap, which has hardly improved in two decades, makes it harder to save for the future.
Meanwhile, women must stretch their savings further. A female retiring at age 65 will likely live another 21 years, nearly three years longer than men, according to the Employee Benefits Security Administration.
A retirement savings shortfall may mean women must cut back on the lifestyle to which they were accustomed to during their working years, said Marianela Collado, a certified financial planner and CEO of Tobias Financial Advisors, based in Plantation, Florida.

They may become burdens on their children if they have kids who can offer financial support, she said at the Women & Wealth event.

Compounding the problem: Caregiving, especially for a spouse, has a “more detrimental economic impact” on women, according to the National Institute on Retirement Security. The same can be said for divorce, it found.

Advice to get on track for retirement

However, there are ways women can try to bolster their nest egg.
At a high level, they can improve their cash flows by increasing money coming in (i.e., income) and decreasing what goes out (i.e., spending), Collado said.
For example, if women think they’re underpaid, they can sit down with their managers at work, inquire about opportunities for growth and find avenues for higher earning potential, Collado said. Show managers where you add value and try to get fair compensation, she added.
That may be easier to do in certain states due to growth in pay transparency laws, which require that employers disclose a salary range for job listings.

Additionally, women can do a personal spending audit on an annual basis and cut budget items that don’t add long-term value, Collado said. Scrutinize spending that’s on “autopilot,” such as automatic charges, she said.
Women should also examine their workplace benefits to determine which are applicable, Collado said.
For example, don’t leave free money on the table by not getting a company’s full 401(k) match, she said. The self-employed can also set up their own 401(k) plan. Those without any access to a workplace retirement plan can save in individual retirement accounts or other types of savings accounts, she said. More

Pan Gongsheng, governor of the People’s Bank of China, told reporters Wednesday there was room to further cut banks’ reserve requirements — the amount of cash they need to have on hand.
He was speaking at a press conference with other key leaders of the country’s economy and financial sector on the sidelines of this year’s annual parliamentary meetings.
This year, China will “continue to strengthen macroeconomic policies,” said Zheng Shanjie, chairman of the National Development and Reform Commission, the country’s economic planning agency.
At the press conference, China’s Minister of Finance Lan Fo’an told reporters the local debt situation is “controllable” overall.

China’s central bank governor said there was room to further cut banks’ reserve requirements, and pledged to utilize monetary policy to prop up consumer prices.
Bloomberg | Bloomberg | Getty Images

BEIJING — The heads of China’s central bank and economic planning agency signaled that authorities would be willing to take further steps to support growth, but did not announce any large-scale stimulus plans.
Pan Gongsheng, governor of the People’s Bank of China, told reporters Wednesday there was room to further cut banks’ reserve requirements — the amount of cash they need to have on hand. He also pledged to utilize monetary policy to “mildly” prop up consumer prices, according to CNBC’s translation of his Mandarin-language remarks.

Pan was speaking at a press conference with other key leaders of the country’s economy and financial sector on the sidelines of this year’s annual parliamentary meetings.
The leaders defended China’s growth target of around 5% for the year, while adhering to a 3% fiscal deficit.
In an annual government work report released on Tuesday, Premier Li Qiang promised to transform the world’s second-largest economy, which is facing a slew of economic challenges including a real estate slump, high levels of local government debt, deflation and weak consumer demand.
Yet, the work report fell short of many analysts’ expectations for further stimulus and raised questions about how China would be able to achieve another year of growth that’s around 5%.
National GDP rose by 5.2% in 2023, up from a low base in 2022 as China emerged from its stringent “zero Covid” measures. China’s consumer prices saw their biggest drop in January since 2009, while producer prices declined for a 16th month — underscoring the depth of the challenge that Beijing faces in reflating the world’s second-largest economy.

Still, Pan said China has ample monetary policy tools at its disposal, and pledged to push for lower financing costs in the months ahead.
The PBOC last cut reserve ratio requirements for banks by 50 basis points from Feb. 5, which provided 1 trillion yuan ($139.8 billion) in long-term capital. It was a much larger cut than analysts expected.

Boosting growth

This year, China will “continue to strengthen macroeconomic policies,” said Zheng Shanjie, chairman of the National Development and Reform Commission, the country’s economic planning agency.
He noted how this would involve coordination of fiscal, monetary, employment, industrial and regional policies, as China continues to step up macro economic policy adjustment.
“Of course, we clearly see that in the process of achieving the expected targets, there are still many difficulties and problems,” Zheng said, according to CNBC’s translation of his Mandarin-language remarks.
He noted how the “external environment may become more complex and severe.” Domestically, there may be problems in China’s efforts to remove provincial barriers to doing business by creating a “national unified market,” he added.
Zheng also said there was fierce competition in some industries, production and operating difficulties for certain businesses, as well as persistent risks in other areas. He did not mention real estate by name.
China’s Commerce Minister Wang Wentao said foreign trade faces a severe situation this year.
Zheng, the NDRC chief, said China’s exports for the January-February period increased by 10% from a year ago, but did not specific if this was in Chinese yuan or U.S. dollar terms. The next tranche of trade data is due to be released Thursday.

Bonds, debt and domestic demand

At the press conference, China’s Minister of Finance Lan Fo’an told reporters the local debt situation is “controllable” overall.
He said local government debt levels declined after his ministry’ work last year, and they are working on a longer term mechanism to resolve the issue of hidden bad debts, while seeking to defuse the issue with a range of measures.
The “ultra long” special treasury bonds announced in Tuesday’s government work report was the rare surprise and only the fourth time they have been issued since the 1990s.
NDRC chief Zheng told reporters these bonds will support technological innovation, energy securities and other key areas — which are among President Xi Jinping’s “new productive forces” spelt in the work report.
He also said policy plans for equipment upgrades will help boost consumption in the world’s second largest economy and create a market of more than 5 trillion yuan (about $694.5 billion). He said this plan would include home appliances and vehicles, among others.
China’s economy has been dragged down by lackluster consumption, as the real estate market slump, debt risks and stock market declines weigh on confidence.
Boosting domestic demand is the third-ranked task of the list of 10 economic priorities in the Chinese government’s plan for this year, underscoring the severity of the matter.
For investors in the near term, the primary concern remains how much China’s policymakers are focused on ensuring growth.
“In order to achieve this [target of around 5%], the government work report proposed many major policies,” Huang Shouhong, head of the report’s drafting team and director of the State Council’s research office, told reporters on Tuesday in Mandarin, translated by CNBC.
“If China’s economy encounters unexpected shocks in the future, or the international environment undergoes unexpected changes, we still have tools in reserve in our policy toolbox,” he said. More

China’s top securities regulator Wu Qing vowed to crack down on fraudulent investors and companies.
Wu outlined measures deemed necessary to improve the quality of listed companies, which included encouraging listed companies to improve stability, as well as timeliness and predictability of dividend payouts.
At the same meeting, China’s central bank governor Pan Gongsheng pledged support for overseas listings for high-quality Chinese companies.

Wu Qing, Chairman of the China Securities Regulatory Commission, answers a question at a press conference during the second session of the 14th National People’s Congress (NPC) in Beijing on March 6, 2024. (Photo by WANG Zhao / AFP) (Photo by WANG ZHAO/AFP via Getty Images)
Wang Zhao | Afp | Getty Images

BEIJING — China’s top securities regulator vowed to “strictly” crack down on market manipulators, while stating that protecting small investors was a “core task.”
Ensuring fairness, especially in a market dominated by smaller investors, is the regulator’s core task, said Wu Qing, chairman of the China Securities Regulatory Commission, on Wednesday at a joint press conference alongside the country’s other top economic and financial planners.

Wu outlined measures deemed necessary to improve the quality of listed companies and increase returns on investment. They include: encouraging listed companies to improve stability, timeliness and predictability of dividend payouts, stricter delisting rules, and expanding inspections of listed companies.
He said that openness, fairness and justice should be the most important principles in the capital market.
“China’s market is the second largest in the world, but it’s not as strong,” Wu said, adding the recent market volatility exposed deep-seated issues.
He said investors need to be better protected, so they can have confidence and trust. It would also attract longer term investors, he added.
At the same press conference, Pan Gongsheng, governor of the People’s Bank of China, also pledged support for overseas listings for high-quality Chinese companies.

Struggling markets

Following recent extreme market volatility, Beijing has stepped up measures to support its beleaguered stock markets in the last few weeks.
These include tightening regulatory restrictions on its rapidly booming quant trading industry and curbing short selling, changing its top securities regulator and share purchases by a “national team.”
The appointment of markets veteran Wu as chairman of the China Securities Regulatory Commission in early February preceded the curbs on quant traders.

A securities business hall in Fuyang, China, in December 2023.
Costfoto | Nurphoto | Getty Images

Wu is known as “Broker Butcher” for his crackdown on traders in his previous roles as acting vice mayor of China’s major financial hub Shanghai and chairman of the Shanghai Stock Exchange.
The Hang Seng Index, a benchmark of Hong Kong listings that includes many offshore Chinese stocks, is coming off four-straight annual losses, while the CSI300 index of the largest blue chips listed in the mainland has booked losses for three straight years.
With the mainland property market in the doldrums and the stock markets in freefall, desperate mainland investors had looked elsewhere for better returns despite stringent capital controls.
At last year’s parliamentary meeting, Beijing had announced an overhaul of finance and tech regulation by establishing party-led commissions to oversee the two sectors as Xi Jinping gained an unprecedented third term as president. More

Fed Chair Jerome Powell heads to Capitol Hill on Wednesday with markets intent on getting more clarity about how the central bank plans on proceeding with monetary policy this year.
Central to the question of how the Fed acts from here on out is its view on inflation and how Powell expresses that.
Powell’s testimony before Congress comes at a ticklish time for markets: After breaching historic highs, major stock averages have sold off this week.

Jerome Powell, chair of the Federal Reserve, during a House Financial Services Committee hearing in Washington, D.C., on June 21, 2023.
Nathan Howard | Bloomberg | Getty Images

Federal Reserve Chairman Jerome Powell heads to Capitol Hill on Wednesday with markets intent on getting more clarity about how the central bank plans on proceeding with monetary policy this year.
The past several months have seen a changing dynamic between financial markets and the Fed over the pace and timing of expected interest rate cuts this year. Markets have had to adjust their collective view from a highly accommodative central bank to one that’s more cautious and deliberate.

With his congressionally mandated testimony coming before the House on Wednesday and the Senate on Thursday, Powell will be tasked with providing a sharper view — and not rocking the boat for a nervous Wall Street.
“The question now for the market is to glean any information on when the Fed will begin employing rate cuts and how many,” said Quincy Krosby, chief global strategist at LPL Financial. “He’s not going to answer that necessarily. But if there is any change, any nuance, that is what the market wants to see.”
Central to the question of how the Fed acts from here on out is its view on inflation and how Powell expresses that. In recent weeks, he and others have expressed satisfaction with the trend in prices along with apprehension that risks still lurk, saying it’s too early to ease up on monetary policy.
Markets currently anticipate the Fed will begin cutting in June and enact the equivalent of four quarter-percentage-point cuts in total this year, according to futures market pricing gauged by the CME Group. Policymakers in December indicated three cuts and mostly have avoided providing a timetable.

Mixed signals complicate the message

On the inflation issue, the data had been cooperating for the most part.

Inflation readings in the latter part of 2023 showed a clear trend toward the Fed’s 2% target. However, January brought a jolt, showing that consumer prices, particularly in shelter costs, remained stubbornly higher and posed a threat to the trend.
Powell will have to synthesize the recent trends carefully as he speaks first to the House Financial Services Committee on Wednesday, then the Senate Banking Committee the day after.
“The message very much is not going to be ‘mission accomplished,’ but ‘we’ve made a lot of progress, we anticipate rate cuts are coming,'” said Joseph LaVorgna, chief economist at SMBC Nikko Securities. “That to me is what I think will be the central message.”
Powell’s testimony before Congress comes at a ticklish time for markets: After breaching historic highs, major stock averages have sold off this week amid ongoing concern about where rates are headed and a suddenly uncertain outlook for a few of the Big Tech names that have been driving prices higher.
Both conditions are concerning for policymakers. Big jumps in risk asset prices could reflect loose financial conditions that might cause the Fed to hold tight on policy, while a less certain environment could raise fears about staying too high for too long on rates.
Powell “cannot deviate at all from the ‘data-dependent, but we really want to cut rates’ approach the Committee has committed to,” wrote Steven Ricchiuto, U.S. chief economist at Mizuho Securities. “Sharp swings in financial conditions can easily work at cross-purposes to the Committee’s objective: maintaining tight labor market conditions while also keeping inflation expectations and long-term rates well anchored,” he said, referring to the policy-setting Federal Open Market Committee.

Political concerns

There are also other dynamics facing Powell. Several economists, including LaVorgna, see labor conditions weakening despite the apparent strength of a 3.7% unemployment rate. Also, a stunning runup in cryptocurrency prices recently suggests untethered risk-taking that could indicate too much liquidity washing around the system.
Indeed, Atlanta Fed President Raphael Bostic on Monday released an essay in which he expressed concern about potential “pent-up exuberance” that could be unleashed after rate cuts start.
“We don’t think monetary policy itself is loose, but the Fed and Powell have to wonder about this nonetheless, in view of these extant ‘remnants’ of speculation,” strategists at Macquarie said in a client note Tuesday. “The point is that small speculative frenzies that come out of nowhere should make it even more difficult for the Fed to sound dovish at this juncture.”
Finally, there are political considerations.
Along with the usual pressure that comes during presidential election years, there have been calls on the Hill for Powell and his cohorts to start cutting rates. Sen. Elizabeth Warren, D-Mass., no fan of Powell to start with, called in January for the Fed to start cutting as higher rates are especially painful for lower-income households.
They’ll get a chance to hash out the issue Thursday as Warren is a member of the Senate banking panel.
Powell needs to make “a case for why the Fed needs to address rates in anticipation of where inflation is likely to be not where it is at the moment,” LaVorgna said. “You’re going to be damned if you do, damned if you don’t. So, I think you need a very solid framework.”Don’t miss these stories from CNBC PRO: More

In the next few weeks, Binyamin Netanyahu, Israel’s prime minister, hopes to gain final parliamentary approval for an emergency war budget. It includes more cash for settlers in the West Bank, as well as for religious schools, where teenagers study the Torah rather than science—part of an attempt to unite his fissiparous political coalition. But it also contains a startling break with the past. Everyday welfare spending (long generous in Israel, owing to its socialist foundations) will be slashed to fund the country’s armed forces. The military budget will almost double from 2023 to 2024. Israel’s unwritten social contract, which has for 70-odd years promised both a generous welfare state and a fearsome military, is under threat.Despite continuing discussions about a ceasefire, Mr Netanyahu has been clear that any pause will be temporary. And even if a ceasefire ends up being extended or he leaves office, there is broad political support for a mightier military. At the same time, the war is proving more expensive than expected. Between October and December Israel’s economy shrank by a fifth at an annualised rate, compared with the previous three months—more than twice the contraction predicted by the Bank of Israel. In the same period, over 750,000 people, or a sixth of the labour force, were away from work, many of them evacuees or reservists. Last month Moody’s, a rating agency, downgraded the country’s credit rating for the first time ever. All this raises a question. Can Israel afford to wage war?The core problem is fiscal. On the eve of Hamas’s attack on October 7th, Israel’s debt-to-GDP ratio was 60%, well below the average in the OECD group of mostly rich countries. From October to December, the armed forces burned through 30bn shekels ($8bn) on top of their usual spending, an amount equivalent to 2% of gdp. And it is not just a bigger budget for the armed forces; the government is also splashing out on accommodation for evacuees, several furlough schemes and support for reservists. Israeli policymakers think that a debt ratio of 66% would be manageable. Mr Netanyahu’s budget would target an annual fiscal deficit of 6.6% of GDP—enough to produce a debt ratio of around 75%.For America or Japan such borrowing would be a breeze. In Israel, however, there is always a chance that more conflict is around the corner. Should the country’s tech industry be wounded, perhaps in a war involving other regional powers, up to a quarter of the country’s income-tax take would be at risk. The last time that Israel went into battle on the present scale, during the Yom Kippur war in 1973, its debt ratio passed 100%, which sparked a financial crisis. As the central bank printed cash, inflation rocketed to 450% by 1985 and the banking sector toppled. To keep bondholders happy, therefore, the government needs room for manoeuvre.Many now worry that Mr Netanyahu’s budget is too lavish. Although, in times of crisis, governments may borrow to keep things ticking over, they are wise to do so modestly. Given Israel’s desire to lift military spending, outgoings will not fall back to pre-war levels anytime soon. As a result, the government needs a plan to stabilise debt while spending remains high.Israel’s tax take in 2022 was worth 33% of GDP, just below the OECD average of 34%. Yet Mr Netanyahu’s budget includes only modest increases. Value-added tax will rise by one percentage point to 18%; a health tax on incomes will go up by 0.15 percentage points. Policymakers worry that raising corporate taxes would cause the tech sector, which is highly mobile and already struggling to find workers, to flee the country. Harsher taxes on households would risk depressing consumption and make life harder still for those who are already struggling because of the war.A tale of one cityIn the suburbs of Jerusalem, secular professional families, which have had members called up and seen income from businesses plummet, are suffering. Many in Arab neighbourhoods—those worst-affected by Mr Netanyahu’s budget—report no longer being welcome at work. A few miles away, though, ultra-Orthodox households, which are exempt from military service and rely on hand-outs that Mr Netanyahu wants to make more generous, have barely had to tighten their belts.The impact on industries is similarly uneven. The tech sector is bearing up reasonably well. Some firms even think they can spin a profit, benefiting from a new round of military contracts. Many have moved operations abroad, which lessens the impact of losing employees to the fight. “Our productivity actually improved,” says Chen Bitan at Cyberark, one of the country’s biggest cyber-security companies. “We told our employees the war would be won by the economy,” he explains. Although local tech investment has fallen, it has done so by about the same amount as in Europe—suggesting the war is not to blame.But the rest of the economy is in trouble. Construction is at a standstill. Farms have lost more than half their workforce. And companies involved in tourism are suffering. In January 77% fewer tourists visited Jerusalem than a year ago.The recovery could be glacial, not least because war has exacerbated longstanding problems. One is the economy’s reliance on low-paid Palestinian workers. The West Bank may import as many goods from Israel as before the war, but its 210,000 day labourers—equivalent to 5% of Israel’s workforce—cannot get out. Their permits were cancelled after October 7th, and Israel’s government is refusing to let them back in. Farms, factories and building sites lack workers. Yet many industrialists are in two minds. “We need the Palestinians, but we cannot be dependent on them,” says one.Israel’s labour market is already uber-tight. Bringing in foreign workers is slow and expensive, and the country’s workforce is less than half the size of its total population. Half of the men in Israel’s Orthodox population, which is the country’s fastest-growing group, refuse to work on religious grounds. Those who do are often woefully undereducated, having attended religious schools. Much the same is true of Arab Israelis, the community with the second-highest fertility rate. And in January new rules extended military service from 32 to 36 months for men, further depleting the labour force.Should debt continue to spiral, as the economy struggles, things will get difficult. But a repeat of what happened after the Yom Kippur war is unlikely. Israel’s ministries are stuffed with technocrats. The public is aware their security depends on a stable economy, and are liable to depose irresponsible politicians. Markets think that a default is improbable. Although borrowing is now more expensive for the government, it is far short of the eye-watering prices paid by irresponsible leaders elsewhere. Credit-default-swap rates, an indicator of markets’ trust in a government, rose from 0.5% to 1.4% after October 7th, before stabilising.Markets appear to have almost as much faith that Israel will not unleash inflation in order to reduce debt payments. The country’s annual inflation, at 3%, is lower than in America, and investors expect it to have fallen to 0.4% by the end of the year. Since the Yom Kippur war, Israel has acquired an inflation-targeting central bank, which is of a hawkish bent. After October 7th it spent $30bn in foreign reserves propping up the shekel (and has another $170bn if the currency needs more cushioning). The shekel has barely moved since.Yet even if a financial crisis is unlikely, that does not mean pain will be avoided. It will just come in a different form: through further spending cuts that are required to guarantee stability. The money that holds Mr Netanyahu’s coalition together will be protected for as long as he remains prime minister. Instead, as indicated by the war budget, Israel’s welfare state will take the hit. Despite having one of the lowest rates of unemployment in the OECD, the country is the fifth-biggest spender on unemployment benefits. Only the governments of Norway and Iceland spend more of their GDP on education. This makes a tempting target for a prime minister who needs to find savings, and has allies to protect.The welfare ministry, which is also responsible for caring for evacuees and returned hostages, will have to take an 8% cut under Mr Netanyahu’s budget—far above that faced by most other civilian ministries. The ministry has already come under fire for its lacklustre support of 135,000 Israelis evacuated from the country’s north and south. It has done little other than pay their hotel bills; now officials are reportedly pressing families to return. If Israel remains under Mr Netanhayu’s mismanagement, other ministries will experience similar treatment. Even if he steps down, however, Israel will have to make hard choices between the two pillars of its social contract: its armed forces and its welfare state. ■ More

Monzo has raised $430 million in a new funding round led by CapitalG, the independent venture arm of Google parent company Alphabet.
Monzo said the fresh cash would be used to accelerate its expansion plans, including a renewed attempt at expanding its service to the U.S.
It comes after Monzo reported bumper growth in 2023 and entered the black for the first time in the first two months of 2023.

Monzo CEO TS Anil.

British digital bank Monzo on Tuesday raised $430 million in fresh capital from investors to help it relaunch its services in the U.S.
Monzo raised the money in a new funding round led by CapitalG, the independent venture arm of Google parent company Alphabet.

HongShan, the Chinese venture capital firm that split from Sequoia Capital last year, also backed the round, alongside existing backers Tencent and Passion Capital.
Monzo, which is one of the U.K.’s most popular app-only banks, said the fresh cash would be used to accelerate its expansion plans. The bank’s CEO, TS Anil, told the Financial Times the capital would allow Monzo to crack the U.S. market after its previous foray was curtailed by U.S. regulators.
“With backing from global investors, we have the rocket fuel to go after our ambitions harder and faster, building Monzo into the one app that sits at the centre of our customers’ financial lives,” Monzo CEO TS Anil said in a statement.
“Each milestone we’ve reached to this point has given us more strength and speed to make strides towards our mission — now we’ll scale to even greater heights and seize the huge opportunity ahead.”

The fresh cash comes off the back of bumper growth for Monzo in 2023.

The U.K. neobank entered the black for the first time in the first two months of 2023. That came as Monzo reported 88% growth in revenues to £214.5 million ($272 million), up from £114 million in 2022.

Relaunching in the U.S.

A fair portion of the cash will be allocated toward helping Monzo relaunch its services in the U.S.
Monzo previously tried launching in the U.S. in 2019, with a beta product available for American consumers. The company was live in the U.S. via a partnership with the community bank Sutton Bank.
It wanted to acquire a full U.S. bank license, but it was forced to abandon this plan in 2021 after a fruitless two-year discourse with regulatory authorities.
Monzo has since opted to focus on re-entering the U.S. with a partnership that would allow it to bypass the requirement of getting a full bank license to serve U.S. customers.
The firm began a search for a U.S. CEO in 2023 to spearhead a renewed attempt at cracking the American market. It hired Conor Walsh, a former executive at fintech firm Block’s Cash App division, as its new U.S. CEO in October 2023.
Monzo’s new round also comes after a focus on new products for the bank. Monzo made its first foray into investment products in 2023, launching investment pots that allow customers to park their cash at a range of funds managed by BlackRock with different levels of risk.
Monzo said it now has more than 9 million retail customers in the U.K., and that it added 2 million of those clients in 2023 alone. The company also has 400,000 business banking customers. More

Inflation hit an annual 29.9% in January, driven by soaring food prices that have triggered a cost-of-living crisis in Africa’s largest economy, while the currency plunged to an all-time low last month.
The IMF called improvements in government revenue collection and oil production “encouraging,” along with the Central Bank of Nigeria’s recent decision to hike interest rates.
Data last week showed that private sector momentum in Nigeria slowed last month, with the Stanbic IBTC Bank PMI (purchasing managers’ index) dropping to 51.0 from 54.5 in January.

IBADAN, Nigeria – Feb. 19, 2024: Demonstrators hold placards during a protest against the hike in price and hard living conditions in Ibadan on February 19, 2024.
Samuel Alabi | Afp | Getty Images

Nigeria is battling to contain a historic currency crisis and soaring inflation, with the International Monetary Fund on Monday warning that almost one in 10 people are facing food insecurity.
Inflation hit an annual 29.9% in January, driven by soaring food prices that have triggered a cost-of-living crisis in Africa’s largest economy. The naira currency, meanwhile, plunged to an all-time low of around 1,600 against the U.S. dollar in late February.

President Bola Tinubu’s government came to power in May 2023, inheriting a highly precarious economic situation, characterized by anemic growth, rising inflation, low revenue collection and import-export imbalances that had accumulated over many years.
His administration promptly launched a raft of economic reforms aimed at liberalizing the economy, such as the removal of fuel subsidies and the relaxation of currency controls.
Though welcomed by foreign investors, the short-term impact has been an uncorking of the various macroeconomic issues that had been artificially contained by the interventionist policies.

LAGOS, Nigeria – Sept. 25, 2023: Street currency dealers at a market in Lagos, Nigeria.
Bloomberg | Bloomberg | Getty Images

IMF staff completed a mission to Nigeria in February and noted on Monday that although economic growth reached 2.8% in 2023, this falls slightly short of the level needed to support the country’s rapid population growth.
“Improved oil production and an expected better harvest in the second half of the year are positive for 2024 GDP growth, which is projected to reach 3.2 percent, although high inflation, naira weakness, and policy tightening will provide headwinds,” the Washington, D.C.-based organization said in its report on the country.

“With about 8 percent of Nigerians deemed food insecure, addressing rising food insecurity is the immediate policy priority.”
However, the IMF welcomed Nigeria’s approval of an “effective and well-targeted social protection system” along with the government’s release of grains, seeds and fertilizers and introduction of dry-season farming.
IMF commends government, central bank efforts
Mission staff noted recent improvements in government revenue collection and oil production as “encouraging,” along with the Central Bank of Nigeria’s recent decision to hike interest rates by 400 basis points to 22.75%, in a bid to contain inflation and ease pressure on the naira. This has triggered a slight strengthening of the currency in recent days.
“The interest rate announcement received a cautious welcome from investors, with the naira gaining some ground against the dollar in the official and parallel markets,” said David Omojomolo, Africa economist at Capital Economics.
“Much of positive reaction was thanks to the scale of the hike, which took the consensus (but not ourselves) by surprise. Also helpful was the recommitment to an inflation targeting framework.”
However, he suggested that there was some cause for concern in the accompanying speech from CBN Governor Olayemi Cardoso, who seemed worried by government policy.

IBADAN, Nigeria – Feb. 19, 2024: Demonstrators are seen at a protest against the hike in price and hard living conditions in Ibadan on February 19, 2024.
Samuel Alabi | Afp | Getty Images

“He delicately cast some of the inflation problem on ‘non-monetary factors’ including persistent infrastructure and insecurity problems,” Omojomolo said in a note Friday.
“He also pointed the finger at loose fiscal policy – Mr. Cardoso probably feels that the CBN’s inflation fight is not being helped by the government’s decision to reintroduce cash transfers to households.”
The central bank’s strategy for stabilizing the naira is also unconvincing, according to Omojomolo.
“Rate hikes will help attract dollars via foreign investment, but [Cardoso] and the government’s focus on alleged foreign exchange speculation shows that the authorities are still reluctant to let the naira move with market forces,” he added.
“Failure to resist these interventionist tendencies risks a fresh build-up of macro-imbalances that lay at the heart of the recent currency and inflation crisis and require monetary policy to be kept tighter for even longer at the expense of economic growth.”
Private sector momentum slowing
Data last week showed that private sector momentum in Nigeria slowed in February, with the Stanbic IBTC Bank PMI (purchasing managers’ index) dropping to 51.0 from 54.5 in January.
Any reading above 50 represents an expansion, and Nigerian PMIs have remained in positive territory for the past three months. However, the full-year average declined from 53.9 in 2022 to 50.4 in 2023.
Pieter Scribante, senior political economist at Oxford Economics Africa, said that high input price and output cost inflation were stifling private sector confidence and business activity.
“Disruptions in the non-oil economy, currency volatility, spiking inflation, higher fuel and transport costs, and food shortages should remain issues throughout 2024, while mounting price pressures, policy uncertainty, and softening consumer spending dampen economic activity and growth,” Scribante said in a research note Monday.
Oxford Economics expects real GDP growth of 2.8% in 2024 as improvements in the hydrocarbon sector offset the weakness in the non-oil economy.
“This year, recovering domestic industries, higher foreign investments, and easing inflation are upside risks,” Scribante added.
“In contrast, downside risk factors are sticky prices, exchange rate weakness, oil price volatility, and domestic insecurity.” More

Moody’s slashed one of New York Community Bank’s key ratings for the second time in a month.
As a result, the regional lender might have to pay more to retain deposits, according to analysts who track the company.
NYCB finds itself in a stock freefall that began a month ago when it reported a surprise fourth-quarter loss and steeper provisions for loan losses.
It fell a further 23% on Monday.

A sign is pictured above a branch of New York Community Bank in Yonkers, New York, on Jan. 31, 2024.
Mike Segar | Reuters

Regional lender New York Community Bank may have to pay more to retain deposits after one of the company’s key ratings was slashed for the second time in a month.
Late Friday, Moody’s Investors Service cut the deposit rating of NYCB’s main banking subsidiary by four notches, to Ba3 from Baa2, putting it three levels below investment grade. That followed a two-notch cut from Moody’s in early February.

The downgrade could trigger contractual obligations from business clients of NYCB who require the bank to maintain an investment grade deposit rating, according to analysts who track the company. Consumer deposits at FDIC-insured banks are covered up to $250,000.
NYCB has found itself in a stock freefall that began a month ago when it reported a surprise fourth-quarter loss and steeper provisions for loan losses. Concerns intensified last week after the bank’s new management found “material weaknesses” in the way it reviewed its commercial loans. Shares of the bank have fallen 73% this year, including a 23% decline Monday, and now trade hands for less than $3 apiece.
Of key interest for analysts and investors is the status of NYCB’s deposits. Last month, the bank said it had $83 billion in deposits as of Feb. 5, and that 72% of those were insured or collateralized. But the figures are from the day before Moody’s began slashing the bank’s ratings, sparking speculation about possible flight of deposits since then.
The Moody’s ratings cuts could affect funds in at least two areas: a “Banking as a Service” business with $7.8 billion in deposits as of a May regulatory filing, and a mortgage escrow unit with between $6 billion and $8 billion in deposits.
“There is potential risk to servicing deposits in the event of a downgrade,” Citigroup analyst Keith Horowitz said in a Feb. 4 research note.

NYCB executives told Horowitz that the deposit rating, which Moody’s had pegged at A3 at the time, would have to fall four notches before being at risk. It has fallen six notches since that note was published.
During a Feb. 7 conference call, NYCB Chief Financial Officer John Pinto confirmed that the bank’s mortgage escrow business needed to maintain an investment grade status and said that deposit levels in the unit fluctuated between $6 billion and $8 billion.
“If there’s a contract with these depositors that you have to be investment grade, theoretically that would be a triggering event,” KBW analyst Chris McGratty said of the Moody’s downgrade.
NYCB didn’t immediately respond to CNBC’s calls or an email seeking comment.
It couldn’t be determined what the contracts force NYCB to do in the event of it breaching investment grade status, or whether downgrades from multiple ratings firms would be needed to trigger contractual provisions. For instance, while Fitch Ratings cut NYCB’s credit ratings to junk last week, it kept the bank’s long-term uninsured deposits at BBB-, one level above junk.
To replace deposits, NYCB could raise brokered deposits, issue new debt or borrow from the Federal Reserve’s facilities, but that would all probably come at a higher cost, McGratty said.
“They will do whatever it takes to keep deposits in house, but as this scenario is playing out, it may become more cost prohibitive to fund the balance sheet,” McGratty said.Don’t miss these stories from CNBC PRO: More