Finance

“Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee’s 2 percent objective,” the summary stated.
The minutes also showed “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.”
The meeting followed a slew of readings that showed inflation was more stubborn than officials had expected to start 2024.

U.S. Federal Reserve Chair Jerome Powell holds a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., May 1, 2024. 
Kevin Lamarque | Reuters

Federal Reserve officials grew more concerned at their most recent meeting about inflation, with members indicating that they lacked the confidence to move forward on interest rate reductions.
Minutes from the April 30-May 1 policy meeting of the Federal Open Market Committee released Wednesday indicated apprehension from policymakers about when it would be time to ease.

The meeting followed a slew of readings that showed inflation was more stubborn than officials had expected to start 2024. The Fed targets a 2% inflation rate, and all of the indicators showed price increases running well ahead of that mark.
“Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee’s 2 percent objective,” the summary said. “The recent monthly data had showed significant increases in components of both goods and services price inflation.”
The minutes also showed “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.” Several Fed officials, including Chair Jerome Powell and Governor Christopher Waller, have said since the meeting that they doubt the next move would be a hike.
The FOMC voted unanimously at the meeting to hold its benchmark short-term borrowing rate in a range of 5.25%-5.5%, a 23-year high where it has been since July 2023.
“Participants assessed that maintaining the current target range for the federal funds rate at this meeting was supported by intermeeting data indicating continued solid economic growth,” the minutes said.

Since then, there have been some incremental signs of progress on inflation, as the consumer price index for April showed inflation running at a 3.4% annual rate, slightly below the March level. Excluding food and energy, the core CPI came in at 3.6%, the lowest since April 2021.
However, consumer surveys indicate increasing worries. For instance, the University of Michigan consumer sentiment survey showed the one-year outlook at 3.5%, the highest since November, while overall optimism slumped. A New York Fed survey showed similar results.
Stocks held in negative territory while Treasury yields were mostly higher following the minutes release.

Upside inflation risk?

Fed officials at the meeting noted several upside risks to inflation, particularly from geopolitical events, and noted the pressure that inflation was having on consumers, particularly those on the lower end of the wage scale. Some participants said the early year increase in inflation could have come from seasonal distortions, though others argued that the “broad-based” nature of the moves means they shouldn’t be “overly discounted.”
Committee members also expressed worry that consumers were resorting to riskier forms of financing to make ends meet as inflation pressures persist.
“Many participants noted signs that the finances of low- and moderate-income households were increasingly coming under pressure, which these participants saw as a downside risk to the outlook for consumption,” the minutes said. “They pointed to increased usage of credit cards and buy-now-pay-later services, as well as increased delinquency rates for some types of consumer loans.”
Officials were largely optimistic about growth prospects though they expected some moderation this year. They also said they anticipate inflation ultimately to return to the 2% objective but grew uncertain over how long that would take, and how much impact high rates are having on the process.
Immigration was mentioned on multiple occasions as a factor both helping spur the labor market and to sustain consumption levels.

Market lowering rate-cut expectations

Public remarks from central bankers since the meeting have taken on a cautionary tone.
Fed Governor Waller on Tuesday said that while he does not expect the FOMC will have to raise rates, he warned that he will need to see “several months” of good data before voting to cut.
Last week, Chair Jerome Powell expressed sentiments that weren’t quite as hawkish in tone, though he maintained that the Fed will “need to be patient and let restrictive policy do its work” as inflation holds higher.
Markets have continued to adjust their expectations for cuts this year. Futures pricing as of Wednesday afternoon after the release of the minutes indicated about a 60% chance of the first reduction still coming in September, though the outlook for a second move in December receded to only a bit better than a 50-50 coin flip chance.
Earlier this year, markets had been pricing in at lease six quarter-percentage point cuts. More

The Consumer Financial Protection Bureau declared on Wednesday that customers of the burgeoning buy now, pay later industry have the same federal protections as users of credit cards.
The agency unveiled what it called an “interpretive rule” that deemed BNPL lenders essentially the same as traditional credit card providers under the decades-old Truth in Lending Act.
The BNPL market is dominated by fintech firms like Affirm, Klarna and PayPal.

Rohit Chopra, director of the CFPB, testifies during a House Financial Services Committee hearing on June 14, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images

The Consumer Financial Protection Bureau declared on Wednesday that customers of the burgeoning buy now, pay later industry have the same federal protections as users of credit cards.
The agency unveiled what it called an “interpretive rule” that deemed BNPL lenders essentially the same as traditional credit card providers under the decades-old Truth in Lending Act.

That means the industry — currently dominated by fintech firms like Affirm, Klarna and PayPal — must make refunds for returned products or canceled services, must investigate merchant disputes and pause payments during those probes, and must provide bills with fee disclosures.
“Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under long-standing laws and regulations already on the books,” CFPB Director Rohit Chopra said in a release.
The CFPB, which last week was handed a crucial victory by the Supreme Court, has pushed hard against the U.S. financial industry, issuing rules that slashed credit card late fees and overdraft penalties. The agency, formed in the aftermath of the 2008 financial crisis, began investigating the BNPL industry in late 2021.

Surging debt

The use of digital installment loan-type services has ballooned in recent years, with volumes surging tenfold from 2019 to 2021, Chopra said during a media briefing. Among CFPB concerns are that some users are given more debt than they can handle, he said.
“Buy now, pay later is now a major part of our consumer credit market as these loans provide a meaningful alternative to other options for consumers,” Chopra told reporters. “The CFPB wants to make sure that these new competitive offerings are not gaining an advantage by sidestepping longstanding rights and responsibilities enshrined under the law.”

It’s unclear how many BNPL providers don’t comply with refund and dispute requirements; on the website for Affirm, for instance, there are pages for both activities.
While the CFPB acknowledged that many BNPL players offer those services, the new rule will ensure that they are applied consistently across the industry, a senior agency official told reporters.
The new rule will go into effect in 60 days, and the agency is now accepting public commentary on it, the official said.

Litigation ahead?

For some time, BNPL providers have anticipated greater regulation, including efforts to apply existing card rules onto the industry. In March, Klarna published a post arguing that its no-interest product was less risky for customers than credit cards — which can often come with steep interest rates — thus requiring less oversight.
“Instead of trying to jam BNPL into an outdated credit card framework that does little to actually protect consumers, leaders in Washington should draft and implement a framework for BNPL that is proportionate to the risk it poses,” Klarna said at the time.
In a statement provided Wednesday, Klarna called the CFPB move a “significant step forward” in BNPL regulation, adding that it already adhered to standards for refunds, disputes and billing information.
“But it is baffling that the CFPB has overlooked the fundamental differences between interest-free BNPL and credit cards, whose whole business model is based on trapping customers into a cycle of paying sky-high interest rates month after month,” said a Klarna spokesperson.
The industry’s stance raises the possibility that, like other financial players including payday lenders, BNPL companies could push back against the CFPB rule by suing the agency.
The CFPB rule capping credit card late fees at $8 per incident, which was set to go into effect this month, was challenged and paused by a federal judge recently.

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“We’re focused on building a great, independent public company,” Allan Tygesen, CEO of DocuSign, told CNBC in an interview this week at a partner event the firm held in London.
DocuSign, an online document signing platform, was rumored to have been circled by private equity suitors Bain Capital and Hellman & Friedman, according to media reports.
He added DocuSign wouldn’t rule out the prospect of M&A in the future, but stressed the firm is “very focused on building a great independent company.”

The DocuSign website is seen on a laptop in Dobbs Ferry, New York, April 1, 2021.
Tiffany Hagler-Geard | Bloomberg | Getty Images

Contract management platform DocuSign is committed to remaining a public company and is working to convince investors of its artificial intelligence potential, CEO Allan Thygesen told CNBC, after reports suggested the firm had been the target of takeover interest from private equity suitors.
“We’re focused on building a great, independent public company,” Thygesen told CNBC in an interview earlier this week at a partner event the company held in London. “I joined DocuSign as a public company, it’s a very exciting time right now, so that’s our plan.”

DocuSign, which offers a popular service that allows users to sign contracts digitally, was rumored to have been circled by suitors Bain Capital and Hellman & Friedman, according to reports from Reuters and Bloomberg earlier this year citing people familiar with the matter.
Reuters and Bloomberg both reported the PE firms were dueling to buy DocuSign for almost $13 billion. According to a February Reuters report, Bain Capital and Hellman & Freshman paused their pursuit of DocuSign due to disagreements over how much they should pay to buy the firm.
CNBC has been unable to independently verify the reports.
Thygesen said he “can’t comment on anything that may or may not have happened in the past,” when asked by CNBC whether he could confirm rumors of PE buyers’ previous interest in DocuSign.
Bain Capital and Hellman & Friedman were unavailable for comment when contacted by CNBC.

Thygesen added DocuSign wouldn’t rule out the prospect of an M&A (merger and acquisition) transaction in the future, telling CNBC: “In the future if something comes up — of course, you can never close the door on any transaction.”
However, he stressed: “We’re very focused on building a great independent company. We feel we have a huge opportunity, so that’s what we’re doing.”
In February, DocuSign announced plans for a restructuring of the business that included a decision to lay off 6% of its global workforce, with the bulk of the redundancies affecting sales and marketing functions.
The firm said it expects to take a $28 million to $32 million hit due to the restructuring plan, consisting primarily of cash expenditures for employee transition, notice period and severance payments, as well as non-cash expenses related to vesting of share-based awards.

At the time, DocuSign said in a filing with the U.S. Securities and Exchange Commission it was taking these restructuring measures to “realize its multi-year growth aspirations as an independent public company.”

AI will have ‘profound’ impact

DocuSign has been trying to convince investors of an AI-driven future for the business, having made several notable announcements of products powered by the technology this year as well as a deal to buy Lexion, an AI-based contract management product, for $165 million in cash.
In addition, Thygesen has taken the company through an entire rebrand, changing its logo and refreshing the company brand.
He also announced a new DocuSign product focus called “Intelligent Agreement Management,” or IAM. IAM is a more automated version of DocuSign’s Contract Lifecycle Management (CLM) process, which encompasses the journey of a contract from pre-signature activities to post-signature management.

“I think we have mostly convinced investors that there’s adults in charge, they’re ahead of the plan, that we’ve stabilized things, and now they want to see how we do with this new stuff,” Thygesen said.
“So we’re going to go and do that and, if we do that, we have a very exciting opportunity for shareholders, for customers, for employees, for everyone,” he added.
Thygesen said he expects AI to have a “very profound” impact “across industries, across functions, across sizes.”
“I feel privileged to be part of that in a company that I think is particularly well-positioned to take advantage of that,” Thygesen said. But, he added, “Even if I wasn’t, I’d be looking for where this is going to impact the business, no matter what business I was running.” More

British regulators on Wednesday dished out a combined £61.6 million ($79 million) in fines to U.S. investment bank Citi for failings in its trading systems and controls.
The fines and were issued by the Prudential Regulation Authority and the Financial Conduct Authority, whose investigation focused on the period between April 1, 2018, and May 31, 2022.

People walk by a CitiBank location in Manhattan on March 01, 2024 in New York City. 
Spencer Platt | Getty Images

LONDON — British regulators on Wednesday dished out a combined £61.6 million ($79 million) in fines to U.S. investment bank Citi for failings in its trading systems and controls.
The fines were issued by the Prudential Regulation Authority and the Financial Conduct Authority, whose investigation focused on the period between April 1, 2018, and May 31, 2022. Citi qualified for a 30% reduction in the amount of the penalty after agreeing to resolve the matter.

“Firms involved in trading must have effective controls in place in order to manage the risks involved. CGML [Citigroup Global Markets Limited] failed to meet the standards we expect in this area, resulting in today’s fine,” Sam Woods, deputy governor for prudential regulation and the chief executive officer of the PRA, said in a statement Wednesday.
The regulators said that certain system and control issues persisted during the probe period and led to trading incidents, such as so-called fat-finger trading blunders. The main incident highlighted took place on May 2. 2022, when an experienced trader incorrectly inputted an order, which resulted in $1.4 billion “inadvertently being executed on European exchanges.”
“Deficiencies in CGML’s trading controls contributed to this incident, in particular the absence of certain preventative hard blocks and the inappropriate calibration of other controls,” the statement read.
In a statement to CNBC, a Citi spokesperson said that the bank was pleased to resolve the matter from more than two years ago, “which arose from an individual error that was identified and corrected within minutes.”
“We immediately took steps to strengthen our systems and controls, and remain committed to ensuring full regulatory compliance.” the spokesperson said. More

Chinese electric car company Xpeng saw its shares soar after reporting an improvement in profit margin and an upbeat outlook for second-quarter deliveries.
Xpeng reported that vehicle margin rose 5.5% in the first three months of the year, from a negative 2.5% in the prior quarter. Vehicle margin is a measure of profitability.
The company forecast deliveries of 29,000 to 32,000 cars in the second quarter, a year-on-year increase of at least 25%.

The Xpeng X9 electric MPV on display at the Beijing auto show on April 25, 2024.
CNBC | Evelyn Cheng

BEIJING — Chinese electric car company Xpeng saw its shares soar after reporting an improvement in profit margin and an upbeat outlook for second-quarter deliveries.
The company’s Hong Kong-listed shares rose more than 13% in morning trade Wednesday. U.S.-listed shares had climbed by nearly 6% in U.S. trade Tuesday after reporting first quarter results.

Xpeng reported that vehicle margin rose 5.5% in the first three months of the year, from a negative 2.5% in the prior quarter. Vehicle margin is a measure of profitability — the higher the margin, the greater the profit the company is making on its car sales.
The company forecast deliveries of 29,000 to 32,000 cars in the second quarter, a year-on-year increase of at least 25%.
Xpeng delivered 21,821 cars in the first quarter of the year, and 9, 393 cars in April.

Following the earnings release, Nomura analysts said in a note Wednesday they are reviewing their estimates for Xpeng.
“Overall, we see XPENG forging ahead with its business plans, and believe that it may enjoy some development ahead,” the report said.

“Meanwhile, considering the intensifying competition in the overall market, that renders smaller players more vulnerable, we remain slightly cautious and suggest investors to closely monitor the new model to be launched under the MONA brand next month,” the Nomura analysts said.

Read more on Pro

Similar to other companies looking to stay competitive in China’s electric car market, Xpeng is expanding its product lineup with a lower-cost vehicle brand called Mona.
The first Mona car — an electric sedan below 200,000 yuan ($27,890) — is set for release in June and scheduled to begin mass deliveries in the third quarter, according to the company.
Xpeng attributed several hundred million yuan in services revenue to its partnership with German automaker Volkswagen. The services segment overall surged by 93.1% year-on-year to 1 billion yuan in the first quarter.
The Chinese company said that in the first half of this year it is establishing partnerships with auto dealership groups in Western Europe, Southeast Asia, the Middle East and Australia to open new stores. In all, Xpeng said it plans to expand its sales network to more than 20 countries. That’s according to a first quarter earnings call transcript from FactSet. More

Three decades ago, when women now entering their 40s became fertile, East Asian governments had reason to celebrate. If a South Korean woman behaved in the same way as her older compatriots, she would emerge from her childbearing years with 1.7 offspring on average, down from 4.5 in 1970. Across the region, policymakers had brought down teenage pregnancies dramatically. The drop in birth rates, which occured over the span of a single generation, was a stunning success. That was until it carried on. And on.A South Korean woman who is now becoming fertile will have on average just 0.7 children over her childbearing years if she follows the example of her older peers. Since 2006 the country’s government has spent $270bn, or just over 1% of GDP a year, on babymaking incentives such as tax breaks for parents, maternity care and even state-sponsored dating. Officials would love even just a few of the “missing” births back. More

Many renters and homeowners can opt to get their electricity from renewable energy sources, such as solar and wind.
Such customers can choose a green energy program offered through their electric utility.
Consumers should select a green power option or renewable energy certificate that has been verified by an independent third party.

Wind turbines in Dawson, Texas, on Feb. 28, 2023. 
Mark Felix | Afp | Getty Images

As carbon emissions from fossil fuels keep warming the planet, eco-conscious consumers may wonder if there’s a way to buy electricity from renewable sources without installing technology like solar panels or windmills on their property.
In short, the answer is yes.

However, the option isn’t necessarily available to all homeowners and renters. It also often comes with a slight price premium, experts said.

Few people are aware they can buy green energy

Renewable energy sources — including wind, solar, hydropower, geothermal and biomass — accounted for about 21% of U.S. electricity generation in 2023, according to the U.S. Energy Information Administration.
Most, or 60%, of energy sources came from fossil fuels like coal, natural gas and oil. These energy sources release carbon dioxide, a greenhouse gas that traps heat in the atmosphere and contributes to global warming.
The White House aims for electricity generation to be free of greenhouse gas emissions by 2035.

A growing number of individuals and organizations are opting to shift away from fossil fuels: About 9.6 million customers bought 273 Terawatt hours of renewable energy through voluntary green power markets in 2022, according to the National Renewable Energy Laboratory. That’s up fivefold from 54 TWh in 2012.

In the voluntary market, customers buy renewable energy in amounts that exceed states’ minimum requirements from utility companies. Over half of all U.S. states have policies to raise the share of electricity sourced from renewables, though most targets are years away.
Voluntary purchases accounted for 28% of the renewable energy market, excluding hydropower, as of 2016, according to the Environmental Protection Agency. They help increase overall demand for renewable electricity, thereby driving change in the energy mix, the EPA said.

Photovoltaic solar panels at the Roadrunner solar plant near McCamey, Texas, on Nov. 10, 2023. 
Jordan Vonderhaar/Bloomberg via Getty Images

The bulk of the increase is from corporations, according to NREL estimates. Residential sales have grown, too, but more slowly.
Just one in six U.S. adults know that they may have the option to buy renewable power, either from their electric company or another provider, according to the most recent NREL survey data on the topic, published in 2011.
“The market does continue to grow every year in terms of sales and customers,” said Jenny Sumner, group manager of modeling and analysis at the NREL.
“But very few people are aware” that they can opt into green programs, she said. “It’s just not something that’s top of mind for most people.”

How consumers can buy green power

Joe Raedle | Getty Images News | Getty Images

Wind turbines in Solano County, California, on Aug. 28, 2023.
Loren Elliott/Bloomberg via Getty Images

Power companies may offer what’s known as green pricing programs.
Customers in these programs, also known as utility green power programs, pay their utility a “small premium” to get electricity from renewable sources, according to the U.S. Energy Department.
The cost generally exceeds that of a utility’s standard electricity service by about 1 to 2 cents per kilowatt hour, Sumner said.
That may roughly translate to about $5 to $15 more per month, Sumner said. It will ultimately depend on factors like program price and household energy use, she added.
Nearly half of Americans, 47%, said they were willing to pay more to get their electricity from 100% renewable sources, according to a 2019 poll by Yale University’s Program on Climate Change Communication. On average, they said they would be willing to pay $33.72 more per month.
Green power marketing programs
Consumers in some states can also opt into green power marketing programs.
Such states have “competitive” energy markets, meaning consumers can choose from among many different companies to generate their power. But unlike green pricing programs, the company generating the renewable power may not be the customer’s utility, which distributes the power.

According to the U.S. Energy Department and the EPA, residential green power options are available in these states with competitive or deregulated markets: California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas and Virginia.
These also tend to come with a premium, though in some regions they “may be price competitive with default electricity options,” the agencies wrote.
Community choice aggregation
With “community choice aggregation” programs, local governments buy power from an alternative green power supplier on behalf of their residents.
The municipality essentially operates as the supplier for the community’s electricity, Sumner said. These programs are especially prevalent in California, she said.
Unlike the other program types, residents generally don’t have to opt into community choice programs; it’s typically automatic and consumers can opt out if they wish, Sumner said.

How renewable energy certificates work

A solar farm in Imperial, California, on December 6, 2023. 
Valerie Macon | Afp | Getty Images

Just because a consumer opts for renewable power doesn’t mean the electricity being pumped into their home is coming from those renewable sources.
This may sound strange, but it has to do with the physical nature of electricity and its movement through the shared electric grid.
“Once the electrons have been injected into the grid, there’s no way of tagging that these are ‘green’ electrons and these are not green,” said Joydeep Mitra, head of the power system program at Michigan State University. “Nobody knows which electrons are going where.”

Green energy programs instead rely on “renewable energy certificates,” or RECs.
The certificates are essentially an accounting mechanism for the generation and purchase of renewable energy, Mitra said.
You may not be getting the green power, but someone somewhere is. And RECs keep track of it all.
Any consumer, even one who doesn’t have access to a green power program through their utility, can also purchase a REC as a separate, stand-alone product. It’s a way to provide extra funding to a renewable energy project, typically sold by a broker or marketer rather than a utility, Sumner said.
Buying these certificates separately doesn’t impact a consumer’s existing utility service relationship.

How to verify your electricity is green

Experts recommend choosing a green power option or REC that has been verified by an independent third party.
That’s because the voluntary sales and purchases of renewable energy aren’t subject to government oversight, according to the EPA and U.S. Energy Department.
One such independent body is the Center for Resource Solutions, a nonprofit that oversees the Green-e certification standard, the agencies said.
For example, Green-e polices the disclosures energy suppliers make to consumers about renewable energy and verifies that the purchase of that energy isn’t being counted toward state energy mandates, among other things.
In this new series, CNBC will examine what climate change means for your money, from retirement savings to insurance costs to career outlook.
Has climate change left you with bigger or new bills? Tell us about your experience by emailing me at gregory.iacurci@nbcuni.com. More

Fed Governor Waller said Tuesday he does not think further interest rate increases will be necessary.
However, cuts are probably “several months” away, the central bank official said during a speech in Washington.

Christopher Waller, governor of the US Federal Reserve, during a Fed Listens event in Washington, D.C., on Friday, Sept. 23, 2022.
Al Drago | Bloomberg | Getty Images

Federal Reserve Governor Christopher Waller, citing a string of data showing that inflation appears to be easing, said Tuesday that he does not think further interest rate increases will be necessary.
However, the policymaker added he will need some convincing before he backs cuts anytime soon.

“Central bankers should never say never, but the data suggests that inflation isn’t accelerating, and I believe that further increases in the policy rate are probably unnecessary,” said Waller, who has been generally hawkish in his recent views, meaning he supports tighter monetary policy.
The comments came in prepared remarks for an appearance before the Peterson Institute for International Economics in Washington.
Waller pointed to a string of recent data, from flattening retail sales to cooling in both the manufacturing and services sectors, to suggest the Fed’s higher rates have helped ease some of the demand that had contributed to the highest inflation rates in more than 40 years.
Though payroll gains have been solid, internal metrics such as the rate at which workers are leaving their jobs show that the ultra-tight labor market that had driven up wages last a level consistent with the Fed’s 2% inflation goal has displayed signs of loosening, he added.
Yet Waller said he’s not ready to back interest rate cuts. As a governor, Waller is a permanent voting member of the rate-setting Federal Open Market Committee.

“The economy now seems to be evolving closer to what the Committee expected,” he said. “Nevertheless, in the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy.”
April’s consumer price index showed inflation running at a 3.4% rate from a year ago, down slightly from March, with the 0.3% monthly increase slightly below what Wall Street economists had been expecting.
The Labor Department report was “a welcome relief,” Waller said, though the “the progress was so modest that it did not change my view that I will need to see more evidence of moderating inflation before supporting any easing of monetary policy.” He gave the report a C-plus grade.
Markets have had to recalibrate their expectations for monetary policy this year.
In the early months, futures markets traders priced in at least six rate cuts this year starting in March. However, a string of higher-than-expected inflation data changed that outlook to where the first cut is not expected to happen until September at the earliest — with at most two reductions of a quarter percentage point before the end of the year, according to the CME Group’s FedWatch Tool.
Waller did not provide an indication for his expectations on the timing or extent of cuts and said he will “keep that to myself for now” on what specific progress he wants to see on future inflation reports. More