<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-820x547.jpg" alt="" class="wp-image-428933" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/GettyImages-138943787-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">WASHINGTON, DC &#8211; FEBRUARY 14: (AFP OUT) U.S. Vice President Joe Biden (R) and Chinese Vice President Xi Jinping talk during an expanded bilateral meeting with other U.S. and Chinese officials in the Roosevelt Room at the White House February 14, 2012 in Washington, DC. While in Washington, Vice President Xi will meet with Biden, President Barack Obama and other senior Administration officials to discuss a broad range of bilateral, regional, and global issues. (Photo by Chip Somodevilla/Getty Images)</figcaption></figure>



U.S.-China relations, marred in the past year by a series of inflection points, have reached one of the most tense periods perhaps since 1972, when the two nations established diplomatic ties.



A Chinese spy balloon. Close encounters in both the air and the Taiwan Strait. Diplomatic spats over the theft of technology, hacking and trade. A drought of military-to-military talks. Even the lapse of a panda agreement.



All point to worsening relations that will hang over next week’s meeting between President Joe Biden and China’s President Xi Jinping, their first in-person meeting in about a year, and the first time since 2017 that Xi has stepped foot on American soil.



But experts and U.S. officials caution not to expect markedly improved relations post-meeting.



“We should probably keep a pretty low bar in terms of tangible outcomes and deliverables,” said Colleen Cottle, deputy director of the Global China Hub at the Atlantic Council. “This is a meeting that’s probably much more about symbolism and showing a commitment among both leaders to maintain high-level communications and keep communications flowing over the course of the next year.”



Senior U.S. administration officials detailed a handful of agenda items during a briefing with reporters. The leaders are expected to discuss hot-button issues including military communications, human rights and the South China Sea, an official said.



“We’re not talking about a long list of outcomes or deliverables,” a senior administration official told reporters. “The goals here really are about managing the competition, preventing the downside risk of conflict and ensuring channels of communication are open.”



Neither the U.S. nor China appears to be gearing up for a significantly positive swing in relations, experts said.



“I think the administration here is quite clear and sober about the likely outcomes of the meeting,” said Jude Blanchette, a China expert at the Center for Strategic and International Studies during the think tank’s press briefing. “They’ve been working hard to lower expectations. I think you’re seeing something similar on the Chinese side.”



Despite low expectations, the meeting could pave the way for future discussions about solutions to issues that impact both countries, said Thomas Fingar, a China expert at Stanford University and former chairman of the National Intelligence Council. He cautioned against the idea that a summit’s purpose is to solve some “critical, otherwise insoluble problem. It doesn’t work that way very often.”



He explained that in China’s political system, lower-level officials often need explicit clearance from the top.



“For there really to be movement for lower levels of the system to engage in specifics, it needs a refreshed endorsement from Xi,” Fingar said.



The meeting itself, though anticipated, was not formally announced by the White House until Friday. Even in recent days, Chinese officials were hesitant to confirm that Xi would attend the meeting with Biden. In a press briefing on Wednesday, China’s foreign ministry spokesperson Wang Wenbin said it “won’t be&nbsp;plain sailing to San Francisco, nor can we leave it to autopilot to get us there.”



Similarly, when White House press secretary Karine Jean-Pierre was asked during a briefing on Wednesday whether the meeting was “locked in,” she said, “I just don’t have anything confirmed.”



When announcing the meeting, Jean-Pierre said in a statement that the leaders would discuss “issues in the U.S.-PRC bilateral relationship, the continued importance of maintaining open lines of communication, and a range of regional and global issues,” using the abbreviation for the People’s Republic of China.



“I don’t think there’s any indication that things are going to improve between the two sides,” said Oriana Skylar Mastro, a China expert at the American Enterprise Institute. She added that neither country is willing to make “any significant concessions” or policy changes “that would be necessary to put the relationship on a different track.”



There are potential areas to move the needle on U.S.-China relations, experts say. NBC News also previously reported that the U.S. is hoping to announce a commitment from China to cut down on fentanyl coming into the U.S., as well as improve military communications.



Military-to-military communications are intended to cut down on the risk of unintended conflict.



It comes at a time when a historic number of U.S. warplanes have been intercepted by China. There were more than 180 incidents of Chinese aircraft intercepting U.S. planes since the fall of 2021, said Ely Ratner, the assistant secretary of defense for Indo-Pacific security affairs, in a Defense Department release. Ratner said that is higher than the number of incidents that took place the decade before that.



An interception has been deadly in the past. In 2001, a U.S. military plane collided with a Chinese fighter jet over the South China Sea, killing the Chinese pilot. The Chinese government held the American crew for over a week.



“We’ve raised the importance of (military-to-military) channels in nearly every conversation we’ve had with the Chinese,” a senior administration official said in the press briefing. “This is absolutely critical. And when we’re talking about managing risks, about avoiding conflict, this is exactly the sort of communication we need to be having both at senior levels of our two militaries, but also operator to operator.”



The Biden-Xi meeting comes just weeks after China announced that Li Shangfu would no longer serve as defense minister. Li has been sanctioned by the U.S., and experts say his removal could open the door to better relations on military communication.



A defense minister who has not been sanctioned by the U.S. could make it easier to resume military-to-military talks, said David Sacks, a fellow at the Council on Foreign Relations.



The Chinese position during Li’s tenure had been, “Why would he talk if he’s under U.S. sanctions? Remove the sanctions, and then we can have a dialogue,” Sacks said. “And so now, presumably his successor will not be under those sanctions, and therefore you don’t have that impediment towards resuming mil-mil dialogue.”



Biden and Xi’s meeting also comes in the lead-up to Taiwan’s 2024 presidential election in January, followed by the U.S. election. Taiwan is a self-ruling democracy that China claims as its own. U.S. policy maintains that Washington does not support Taiwan’s independence, though there is a policy of strategic ambiguity over how the U.S. would respond if China were to invade the island.



Experts say that during the meeting Biden may warn Xi against interfering in Taiwan’s election, “also to give whoever the winner of the election is an opportunity to put forward a proposal for cross-strait dialogue,” Sacks said.



When a senior administration official was asked during the briefing about how the Taiwanese election may come up in the Biden-Xi meeting, the officials emphasized U.S. opposition to any potential Chinese interference.



“We’ve been clear publicly and privately that interference in the Taiwan election is something we’re extremely concerned about,” a senior administration official said. “And of course, we’ll plan on delivering that message again.”

Vice President Biden Holds Bilateral Meeting With Chinese Vice President Xi Jinping

As Biden and Xi gear up for a high-stakes meeting, experts have low expectations

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-820x461.jpeg" alt="" class="wp-image-428898" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107304015-1695236207011-gettyimages-1677964220-AFP_33VU6J4.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Federal Reserve Chairman Jerome Powell said Thursday that he and his fellow policymakers are encouraged by the slowing pace of inflation but are unsure whether they’ve done enough to keep the momentum going.



Speaking a little more than a week after the central bank voted to hold benchmark policy rates steady, Powell said in remarks for an International Monetary Fund audience in Washington, D.C., that more work could be ahead in the battle against high prices.



“The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time; we are not confident that we have achieved such a stance,” he said in his prepared speech.



For the second time in recent weeks, a public address from Powell was interrupted by climate protesters. He briefly left the stage before resuming.



The speech comes with inflation still well above the Fed’s long-standing goal but also considerably below its peak levels in the first half of 2022. In a series of 11 rate hikes that constituted the most aggressive policy tightening since the early 1980s, the committee took its benchmark rate from near zero to a target range of 5.25%-5.5%.



Those increases have coincided with the Fed’s preferred inflation gauge, the core personal consumption expenditures price index, to fall to an annual rate of 3.7%, from 5.3% in February 2022. The more widely followed consumer price index peaked above 9% in June of last year.



Powell said that inflation is “well above” where the Fed would like to see it while describing policy as “significantly restrictive.”



“My colleagues and I are gratified by this progress but expect that the process of getting inflation sustainably down to 2 percent has a long way to go,” he said. “We will keep at this until we succeed,” he later added, saying the Fed is focused on whether rates need to go higher and how long they need to stay elevated.



Stocks headed lower after the speech, with the Dow Jones Industrial Average down close to 200 points. Treasury yields lurched higher after declining for most of the past three weeks, propelled up in large part after a poorly received 30-year bond auction.



“Chairman Powell issued a warning to investors too giddy on the prospect of rate cuts next year,” said Jeffrey Roach, chief economist at LPL Financial. “The Fed will be true to its mandate and hike further should inflation reaccelerate.”



As he has in recent speeches, Powell stressed that the Fed nevertheless can be cautious as the risks between doing too much and too little have come into closer balance. He said the Fed is attuned to the rise in Treasury yields.



“If it becomes appropriate to tighten policy further, we will not hesitate to do so,” he said. “We will continue to move carefully, however, allowing us to address both the risk of being misled by a few good months of data, and the risk of overtightening.”



“Monetary policy is generally working the way we think it should work” Powell said during a discussion following his speech.



Markets are largely convinced the Fed is through hiking rates.



Futures pricing, according to the CME Group, indicates less than a 10% probability that the FOMC will approve a final rate hike at its Dec. 12-13 meeting, even though committee members in September penciled in an additional quarter percentage point rise before the end of the year.



Traders anticipate the Fed will start cutting next year, probably around June.



Powell noted the progress the economy has made. Gross domestic product accelerated at a “quite strong” 4.9% annualized pace in the third quarter, though Powell said the expectation is for growth to “moderate in coming quarters.” He described the economy as “just remarkable” in 2023 in the face of a broad consensus that a recession was inevitable.



Unemployment remains low, though the jobless rate has risen half a percentage point this year, a move commonly associated with recessions.



But Powell noted that the Fed is “attentive” that stronger-than-expected growth could undermine the fight against inflation and “warrant a response from monetary policy.”



He also pointed out that improvements in supply chains have helped ease inflation pressures, but “it is not clear how much more will be achieved by additional supply-side improvements. Going forward, it may be that a greater share of the progress in reducing inflation will have to come from tight monetary policy restraining the growth of aggregate demand.”



The remarks are part of a broader presentation he is giving to the Jacques Polak Annual Research Conference. One broad policy topic he addressed was the challenge posed by keeping rates anchored near zero, where they were before the inflation surge. Powell said it is “too soon” to say whether zero-rate challenges are “a thing of the past.”

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Powell says Fed is ‘not confident’ it has done enough to bring inflation down

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-820x462.jpeg" alt="" class="wp-image-428864" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107275996-1690265782638-gettyimages-1568546745-vcg111446786977.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">An employee works on the assembly line of LED lighting products in China. Vcg | Visual China Group | Getty Images</figcaption></figure>



China’s consumer prices fell in October, as the world’s second-largest economy struggled with an uneven post-Covid recovery.



Data from China’s National Bureau of Statistics on Thursday showed October consumer price index shrank 0.2% year-on-year, more than the 0.1% decline expected by economists polled by Reuters.



This comes after China’s CPI was unexpectedly flat in September, highlighting the need for further policy support.



Producer prices declined 2.6%, slightly smaller than an expected decline of 2.7% and has been in negative territory for the 13th straight month. China’s PPI was at 2.5% in September, showing factory deflationary pressures remained.



“China is still in a deflationary environment. The domestic demand remains sluggish,” said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management.



Beijing has provided targeted policy support even as recent data suggested growth has remained sluggish. Further hurting consumer confidence is an ongoing debt crisis in two of China’s largest real estate developers. China’s property sector makes up about 30% of its economy.



“With the budget deficit rising and the property developers potentially gaining support from the government, domestic demand will likely improve next year,” Zhang said.



Investors will now be tracking this year’s Singles Day shopping festival, which ends on Nov. 11, to gauge the strength of Chinese consumption.



But excitement about the shopping festival has waned.



“I think this year’s Singles Day sale has not been living up to expectations,” Hao Hong, partner and chief economist at Grow Investment Group told CNBC’s “Squawk Box Asia.”



“Ever since last year, people have stopped spending a lot of money on the Singles Day sale, so it is going to be a muted sales year,” Hong said.

107275996-1690265782638-gettyimages-1568546745-vcg111446786977

China’s consumer prices swing to declines in October

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-820x461.jpeg" alt="" class="wp-image-428825" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Central banks look to have hit peak rates. Here’s how markets think they’ll come down</figcaption></figure>



The world’s major central banks paused their interest rate hiking cycles in recent weeks and with data suggesting economies are softening, markets are turning their attention to the first round of cuts.



The U.S. Federal Reserve, European Central Bank and the Bank of England dramatically hiked rates over the last 18 months in a bid to tame runaway inflation.



The Fed on Wednesday held benchmark interest rates steady at a target range of 5.25%-5.5% for the second consecutive meeting after ending a string of 11 hikes in September.



Though Chairman Jerome Powell has been keen to reiterate that the Fed’s work on inflation is not yet done, the annual rise in the consumer price index came in at 3.7% in September, down from a pandemic-era peak of 9.1% in June 2022.



Yet despite Powell’s refusal to close the door on further increases in order to finish the job on inflation, markets interpreted the central bank’s tone as a slightly dovish pivot and rallied on the back of the decision.



The market is now narrowly pricing a first 25 basis point cut from the Fed on May 1, 2024, according to CME Group’s FedWatch tool, with 100 basis points of cuts now expected by the end of next year.



Since last week’s decision, U.S. nonfarm payrolls came in softer than expected for October, with job creation below trend, unemployment rising slightly and a further deceleration in wages. Although headline inflation remained unchanged at 3.7% annually from August to September, the core figure came down to 4.1%, having roughly halved over the last 12 months.



“Core PCE, which is the Fed’s preferred inflation metric, is even lower at 2.5% (3-month, annualized),” noted analysts at DBRS Morningstar.



“The lagged effects of a cooler housing market should reinforce the disinflationary trend over the next few months.”



But despite the dovish data points, short-term U.S. Treasurys reversed course to sell off on Monday, which Deutsche Bank’s Jim Reid chalked up to investors beginning to “wonder if last week’s narrative about rate cuts was overdone.”



“The U.S. economy is also proving more resilient than the U.K. and euro zone,” he said.



“For instance, market pricing for the Fed now implies a 16% chance of another rate hike, up from 11% on Friday,” Reid said in an email Tuesday.



“Moreover, the rate priced in by the December 2024 meeting was up +12.4bps to 4.47%. So there was a clear, albeit partial unwinding of last week’s moves.”



Reid also highlighted that this is the seventh time this cycle that markets have notably reacted on dovish speculation.



“Clearly rates aren’t going to keep going up forever, but on the previous 6 occasions we saw hopes for near-term rate cuts dashed every time. Note that we’ve still got above-target inflation in every G7 country,” he added.



<h3 class="wp-block-heading" id="h-the-ecb">The ECB</h3>



The European Central Bank late last month ended its run of 10 consecutive hikes to keep its benchmark interest rate at a record high of 4%, with euro zone inflation falling to a two-year low of 2.9% in October and the core figure also continuing to decline.



The market is also pricing almost 100 basis point of cuts for the ECB by December 2024, but the first 25 basis point reduction is mostly priced in for April, with economic weakness across the 20-member common currency bloc fueling bets that the central bank will be the first to start unwinding its tight policy position.



Gilles Moëc, group chief economist at AXA, said October’s inflation print confirmed and amplified the message that “disinflation has come in earnest to Europe,” vindicating the ECB’s “new-found prudence.”



“Of course, the current disinflation does not preclude the possibility that a ‘line of resistance’ would be found well above the ECB’s target. Yet, the confirmation that the euro area was flirting with recession last summer reduces this probability,” Moëc said in a research note Monday.



After the October meeting, ECB President Christine Lagarde batted away the suggestion of rate cuts, but National Bank of Greece Governor Yannis Stournaras has since openly discussed the possibility of a reduction in the middle of 2024 provided inflation stabilizes below 3%.



“This implicitly advocates a forward-looking version of monetary policy which takes lags into consideration to calibrate its stance. In clear, waiting for inflation to reach 2% before cutting rates would be ‘overkill,’” Moëc said.



“There is no doubt in our mind that the current dataflow is clearly favouring the doves, but the hawks are far from having given up the fight.”



<h3 class="wp-block-heading">The Bank of England</h3>



The Bank of England on Thursday kept its main policy rate unchanged at 5.25% for a second consecutive meeting after ending a run of 14 straight hikes in September.



However, minutes from last week’s meeting reiterated the Monetary Policy Committee’s expectations that rates will need to stay higher for longer, with the U.K. CPI holding steady at 6.7% in September. Despite this, the market on Monday was pricing around 60 basis points of cuts by December 2024, albeit starting in the second half of the year.



BNP Paribas economists on Thursday noted an “eye-catching” addition to the MPC’s guidance, which said its latest projections indicated that “monetary policy was likely to need to be restrictive for an extended period of time.”



“Governor Andrew Bailey’s comments at the press conference indicated that this guidance was not intended as push-back on the market-implied policy rate path that underpins its latest forecasts, where a 25bp cut is not fully priced in until the second half of 2024,” they said.



“Instead, the intention was to indicate that cuts are not likely to feature as part of the conversation any time soon.”



At Thursday’s news conference, Bailey emphasized the upside risks to the bank’s inflation projections, rather than entertaining any suggestion of cuts on the horizon.



“While we don’t think it is necessarily indicative of a high risk of further hikes in the near term, we read it as a further sign that the MPC is not considering rate cuts and will not do so for a while,” BNP Paribas added.

107277394-16904012742023-07-26t194615z_1904631592_rc26b2andezq_rtrmadp_0_usa-stocks

Central banks look to have hit peak rates. Here’s how markets think they’ll come down

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/12/BE2FA7DW6VJP3AYQ5S5CUCMQO4-820x547.jpg" alt="" class="wp-image-414305" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/12/BE2FA7DW6VJP3AYQ5S5CUCMQO4-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/12/BE2FA7DW6VJP3AYQ5S5CUCMQO4-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/12/BE2FA7DW6VJP3AYQ5S5CUCMQO4-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2021/12/BE2FA7DW6VJP3AYQ5S5CUCMQO4-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/12/BE2FA7DW6VJP3AYQ5S5CUCMQO4.jpg 960w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. REUTERS/Yuri Gripas/File Photo</figcaption></figure>



BEIJING, Nov 7 (Reuters) &#8211; The International Monetary Fund on Tuesday upgraded its 2023 gross domestic product growth forecast for China to 5.4% from 5%, citing a &#8220;strong&#8221; post-COVID-19 recovery, but said the fund still expected the Chinese economy to slow next year.



GDP growth could slow to 4.6% in 2024 because of continued weakness in China&#8217;s property sector and subdued external demand, the IMF said in a press release, albeit better than its October expectation of 4.2% in the IMF&#8217;s World Economic Outlook (WEO).



The upward revision followed a decision by China to approve a 1 trillion yuan ($137 billion) sovereign bond issue and allow local governments to frontload part of their 2024 bond quotas, in a move to support the economy.



&#8220;These projections reflect upward revisions of 0.4 percentage points in both 2023 and 2024 relative to October WEO projections due to a stronger-than-expected third-quarter outturn and recent policy announcements,&#8221; said IMF&#8217;s First Deputy Managing Director Gita Gopinath in the statement.



Over the medium term, growth is projected to gradually slow to about 3.5% by 2028 amid headwinds from weak productivity and population aging, according to Gopinath.



China has introduced numerous measures to support the property market, but more is needed to secure a quicker recovery and lower economic costs during the transition, she said.



A comprehensive policy package should include measures to accelerate the exit of nonviable property developers, remove impediments to housing price adjustment, allocate additional central government funding for housing completion, and assist viable developers to repair balance sheets and adapt to a smaller property market, Gopinath said. 



(Reporting by Joe Cash and Ryan Woo; Editing by Edmund Klamann and Christopher Cushing)

BE2FA7DW6VJP3AYQ5S5CUCMQO4

IMF revises up China’s 2023, 2024 GDP growth forecasts

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107283802-1691585442966-gettyimages-1585942148-AFP_33QT9M7-820x462.jpeg" alt="" class="wp-image-428799" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107283802-1691585442966-gettyimages-1585942148-AFP_33QT9M7-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107283802-1691585442966-gettyimages-1585942148-AFP_33QT9M7-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107283802-1691585442966-gettyimages-1585942148-AFP_33QT9M7-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107283802-1691585442966-gettyimages-1585942148-AFP_33QT9M7-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107283802-1691585442966-gettyimages-1585942148-AFP_33QT9M7.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



Office-sharing company WeWork filed for Chapter 11 bankruptcy protection in New Jersey federal court Monday, saying that it had entered into agreements with the vast majority of its secured note holders and that it intended to trim “non-operational” leases.



The bankruptcy filing is limited to WeWork’s locations in the U.S. and Canada, the company said in a press release. The company reported liabilities ranging from $10 billion to $50 billion, according to a bankruptcy filing.



“I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and expedite this process through the Restructuring Support Agreement,” WeWork CEO David Tolley said in a press release. “We remain committed to investing in our products, services, and world-class team of employees to support our community.



WeWork has suffered one of the most spectacular corporate collapses in recent U.S. history over the past few years. Valued in 2019 at $47 billion in a round led by Masayoshi Son’s SoftBank, the company tried and failed to go public five years ago.



The pandemic caused further pain as many companies abruptly ended their leases, and the economic slump that followed led even more clients to close their doors.



It disclosed in an August regulatory filing that bankruptcy could be a concern.



WeWork debuted through a special purpose acquisition company in 2021 but has since lost about 98% of its value. The company in mid-August announced a 1-for-40 reverse stock split to get its shares trading back above $1, a requirement for keeping its New York Stock Exchange listing.



WeWork shares had fallen to a low of about 10 cents and were trading at about 83 cents before the stock was halted Monday.



Former CEO and co-founder Adam Neumann said that the filing was “disappointing.”



“It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before,” Neumann said in a statement to CNBC. “I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”



As recently as September, the company said it had been actively renegotiating leases and that it was “here to stay.” The company had close to $16 billion in long-term lease obligations, according to securities filings.



The company leases millions of square feet of office space in 777 locations around the world, according to its regulatory filings.



WeWork has engaged Kirkland &amp; Ellis and Cole Schotz as legal advisors. PJT Partners will serve as its investment bank, with support from C Street Advisory Group and Alvarez &amp; Marsal.



CNBC’s Ari Levy contributed to this report.

107283802-1691585442966-gettyimages-1585942148-AFP_33QT9M7

WeWork, once valued at $47 billion, files for bankruptcy

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="514" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107327279-16988668582023-11-01t190353z_811734167_rc2i44a8w2ze_rtrmadp_0_usa-economy-fed-820x514.jpeg" alt="" class="wp-image-428687" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107327279-16988668582023-11-01t190353z_811734167_rc2i44a8w2ze_rtrmadp_0_usa-economy-fed-820x514.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107327279-16988668582023-11-01t190353z_811734167_rc2i44a8w2ze_rtrmadp_0_usa-economy-fed-300x188.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107327279-16988668582023-11-01t190353z_811734167_rc2i44a8w2ze_rtrmadp_0_usa-economy-fed-143x90.jpeg 143w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107327279-16988668582023-11-01t190353z_811734167_rc2i44a8w2ze_rtrmadp_0_usa-economy-fed-768x482.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107327279-16988668582023-11-01t190353z_811734167_rc2i44a8w2ze_rtrmadp_0_usa-economy-fed-1536x964.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/11/107327279-16988668582023-11-01t190353z_811734167_rc2i44a8w2ze_rtrmadp_0_usa-economy-fed-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



The Federal Reserve on Wednesday again held benchmark interest rates steady amid a backdrop of a growing economy and labor market and inflation that is still well above the central bank’s target.



In a widely expected move, the Fed’s rate-setting group unanimously agreed to hold the key federal funds rate in a target range between 5.25%-5.5%, where it has been since July. This was the second consecutive meeting that the Federal Open Market Committee chose to hold, following a string of 11 rate hikes, including four in 2023.



The decision included an upgrade to the committee’s general assessment of the economy. Stocks rallied on the news, with the Dow Jones Industrial Average gaining 212 points on the session.



“The process of getting inflation sustainably down to 2% has a long way to go,” Fed Chair Jerome Powell said in remarks at a news conference. He stressed that the central bank hasn’t made any decisions yet for its December meeting, saying that “The committee will always do what it thinks is appropriate at the time.”



Powell added that the FOMC is not considering or even discussing rate reductions at this time.



He also said the risks around the Fed doing too much or too little to fight inflation have become more balanced.



“This signals that while there is a potential risk for the Fed to do more, the bar has become higher for rate hikes, and we are clearly seeing this play out with two consecutive meetings of no policy action from the Fed,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.



<h2 class="wp-block-heading" id="h-economy-has-moderated"><a></a>Economy has ‘moderated’</h2>



The post-meeting statement had indicated that “economic activity expanded at a strong pace in the third quarter,” compared with the September statement that said the economy had expanded at a “solid pace.” The statement also noted that employment gains “have moderated since earlier in the year but remain strong.”



Gross domestic product expanded at a 4.9% annualized rate in the third quarter, stronger than even elevated expectations. Nonfarm payrolls growth totaled 336,000 in September, well ahead of the Wall Street outlook.



There were few other changes to the statement, other than a notation that both financial and credit conditions had tightened. The addition of “financial” to the phrase followed a surge in Treasury yields that has caused concern on Wall Street. The statement continued to note that the committee is still “determining the extent of additional policy firming” that it may need to achieve its goals. “The Committee will continue to assess additional information and its implications for monetary policy,” the statement said.



Wednesday’s decision to stay put comes with inflation slowing from its rapid pace of 2022 and a labor market that has been surprisingly resilient despite all the interest rate hikes. The increases have been targeted at easing economic growth and bringing a supply and demand mismatch in the labor market back into balance. There were 1.5 available jobs for every available worker in September, according to Labor Department data released earlier Wednesday.



Core inflation is currently running at 3.7% on an annual basis, according to the latest personal consumption expenditures price index reading, which the Fed favors as an indicator for prices.



While that has decreased steadily this year, it is well above the Fed’s 2% annual target.



The post-meeting statement indicated that the Fed sees the economy holding strong despite the rate hikes, a position in itself that could prompt policymakers into a prolonged tightening stance.



In recent days, the “higher-for-longer” mantra has become a central theme for where the Fed is headed. While multiple officials have said they think rates can stay where they are as the Fed assesses the impact of the previous increases, virtually none have said they are considering cuts anytime soon. Market pricing indicates the first cut could come around June 2024, according to CME Group data.



<h2 class="wp-block-heading"><a></a>Surging bond yields</h2>



The restrictive stance has been a factor in the surging bond yields. Treasury yields have risen to levels not seen since 2007, the earliest days of the financial crisis, as markets parse out what is ahead. Yields and prices move in opposite direction, so a rise in the former reflects waning investor appetite for Treasurys, generally considered the largest and most liquid market in the world.



The surge in yields is seen as a byproduct of multiple factors, including stronger-than-expected economic growth, stubbornly high inflation, a hawkish Fed and an elevated “term premium” for bond investors demanding higher yields in return for the risk of holding longer-duration fixed income.



There also are worries over Treasury issuance as the government looks to finance its massive debt load. The department this week said it will be auctioning off $776 billion of debt in the fourth quarter, starting with $112 billion across three auctions next week.



During a recent appearance in New York, Powell said he thinks the economy may have to slow further to bring down inflation. Most forecasters expect economic growth to tail off ahead.



A Treasury Department forecast released earlier this week indicated that the pace of growth likely will tumble to 0.7% in the fourth quarter and just 1% for the full year in 2024. Projections the Fed released in September put expected GDP growth at 1.5% in 2024.



In the wake of the Fed’s comments, the Atlanta Fed’s GDPNow growth tracker slashed expectations for fourth-quarter GDP almost in half to 1.2% from 2.3%. The gauge takes in data on a real-time basis and adjusts its estimates with the latest information.



Whitney Watson, co-CIO of fixed income and liquidity solutions at Goldman Sachs Asset Management, said it’s likely the Fed will keep its policy unchanged into next year.



“There are risks in both directions,” Watson said. “The rise in inflation expectations, owing to higher gas prices, combined with strong economic activity, preserves the prospect of another rate hike. Conversely, a more pronounced economic slowdown caused by the growing impact of higher interest rates might accelerate the timeline for transitioning to rate cuts.”

107327279-16988668582023-11-01t190353z_811734167_rc2i44a8w2ze_rtrmadp_0_usa-economy-fed

Fed holds rates steady, upgrades assessment of economic growth

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="548" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/AR3HWBTG6VMVDAMWHXJAFBNKZQ-820x548.jpg" alt="" class="wp-image-428635" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/AR3HWBTG6VMVDAMWHXJAFBNKZQ-820x548.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/AR3HWBTG6VMVDAMWHXJAFBNKZQ-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/AR3HWBTG6VMVDAMWHXJAFBNKZQ-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/AR3HWBTG6VMVDAMWHXJAFBNKZQ-768x513.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/AR3HWBTG6VMVDAMWHXJAFBNKZQ-1536x1026.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/AR3HWBTG6VMVDAMWHXJAFBNKZQ-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: U.S. Secretary of the Treasury Janet Yellen, President Joe Biden, and Secretary of State Antony Blinken attend the U.S.-Africa Leaders Summit Closing Session on Promoting Food Security and Food Systems Resilience, at the Walter E. Washington Convention Center, in Washington, D.C., U.S. December 15, 2022. REUTERS/Ken Cedeno</figcaption></figure>



WASHINGTON, Oct 30 (Reuters)&nbsp;&#8211;&nbsp;U.S. President Joe Biden said on Monday that he intends to end the participation of Gabon, Niger, Uganda and the Central African Republic in the African Growth and Opportunity Act (AGOA) trade program.



Biden said he was taking the step because of &#8220;gross violations&#8221; of internationally recognized human rights by the Central African Republic and Uganda.



He also cited Niger and Gabon&#8217;s failure to establish or make continual progress toward the protection of political pluralism and the rule of law.



&#8220;Despite intensive engagement between the United States and the Central African Republic, Gabon, Niger, and Uganda, these countries have failed to address United States concerns about their non-compliance with the AGOA eligibility criteria,&#8221; Biden said in a letter to the speaker of the U.S. House of Representatives.



Biden said he intends to terminate the designation of these countries as beneficiary sub-Saharan African countries under the AGOA, effective Jan. 1, 2024.



He said he will continue to assess whether they meet the program&#8217;s eligibility requirements.



Launched in 2000, AGOA grants exports from qualifying countries duty-free access to the U.S. market. It is set to expire in September 2025, but discussions are already under way over whether to extend it and for how long.



African governments and industry groups are pushing for an early 10-year extension without changes in order to reassure business and new investors who might have concerns over AGOA&#8217;s future.



(Reporting by Jasper Ward in Washington; Editing by Matthew Lewis)

FILE PHOTO: U.S President Joe Biden participates in the U.S.-Africa Leaders Summit in Washington

US to evict Gabon, Niger, Uganda and Central African Republic from trade program

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/ABAZWTPJHJPOVPZE2S7EGTK244-820x547.jpg" alt="" class="wp-image-428631" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/ABAZWTPJHJPOVPZE2S7EGTK244-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/ABAZWTPJHJPOVPZE2S7EGTK244-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/ABAZWTPJHJPOVPZE2S7EGTK244-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/ABAZWTPJHJPOVPZE2S7EGTK244-768x513.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/ABAZWTPJHJPOVPZE2S7EGTK244-1536x1025.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/ABAZWTPJHJPOVPZE2S7EGTK244-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: The North Korean flag flutters at the North Korea consular office in Dandong, Liaoning province, China April 20, 2021. Picture taken April 20, 2021. REUTERS/Tingshu Wang</figcaption></figure>



SEOUL, Oct 31 (Reuters)&nbsp;&#8211;&nbsp;North Korea&#8217;s recent closing of its diplomatic missions in Angola and Uganda was a sign that the reclusive country is struggling to make money overseas because of international sanctions, South Korea&#8217;s unification ministry said on Tuesday.



Both Angola and Uganda have forged friendly ties with North Korea since the 1970s, maintaining military cooperation and providing rare sources of foreign currency such as statue-building projects.



But on Monday, Pyongyang&#8217;s state media outlet KCNA said its ambassadors paid &#8220;farewell&#8221; visits to Angolan and Ugandan leaders last week, and local media in both African countries reported the shutdown of the North&#8217;s embassies there.



Seoul&#8217;s unification ministry, which handles inter-Korean affairs, said the pullout reflected the impact of international sanctions aimed at curbing funding for the North&#8217;s nuclear and missile programs.



&#8220;They appear to be withdrawing as their foreign currency earning business has stumbled due to the international community&#8217;s strengthening of sanctions, making it difficult to maintain the embassies any longer,&#8221; the ministry said in a statement. &#8220;This can be a sign of North Korea&#8217;s difficult economic situation, where it is difficult to maintain even minimal diplomatic relations with traditionally friendly countries.&#8221;



North Korea has formal relations with 159 countries, but had 53 diplomatic missions overseas, including three consulates and three representative offices, until it pulled out of Angola and Uganda, according to the ministry.



Japan&#8217;s Yomiuri Shimbun newspaper reported last week, citing unnamed sources, that North Korea was planning to shut down at least 10 diplomatic missions, including a consulate in Hong Kong, largely because of economic difficulties.



(Reporting by Hyonhee Shin; Additional reporting by Hyunsu Yim; Editing by Gerry Doyle)

The North Korean flag flutters at the North Korea consular office in Dandong

North Korea’s closure of Africa embassies a sign of economic hardships – South’s ministry

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318937-1697610036289-gettyimages-1221975332-dsc_3504-820x547.jpeg" alt="" class="wp-image-428425" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318937-1697610036289-gettyimages-1221975332-dsc_3504-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318937-1697610036289-gettyimages-1221975332-dsc_3504-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318937-1697610036289-gettyimages-1221975332-dsc_3504-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318937-1697610036289-gettyimages-1221975332-dsc_3504-768x513.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318937-1697610036289-gettyimages-1221975332-dsc_3504-1536x1025.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318937-1697610036289-gettyimages-1221975332-dsc_3504-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Athima Tongloom | Moment | Getty Images</figcaption></figure>



For most people, their goal is to work hard, save money and retire early. But a “soft saving” trend is emerging among younger workers, challenging the traditional way of thinking.



Soft saving refers to putting less money into the future, and using more of it for the present.



Generation Z — a generation that puts experiences before money — is leading the so-called soft saving wave, according to the Prosperity Index Study by Intuit. “Soft saving is the soft life’s answer to finances,” said the report.



A “soft life” is a lifestyle that embraces comfort and low stress, prioritizing personal growth and mental wellness.



The report found the approach to investing and personal finance by Gen Z’s — those born after 1997 — to be “softer” than previous decades.



What does that mean? It means younger investors tend to put their money in causes that reflect their personal views.



They also seek emotional connection with brands and professionals they choose to engage with, Liz Koehler, head of advisor engagement for BlackRock’s U.S. Wealth Advisory business told CNBC.



<h2 class="wp-block-heading" id="h-are-people-saving-less"><a></a>Are people saving less?</h2>



Younger workers have a desire to break free from restrictive financial constraints.



Three in four Gen Z would rather have a better quality of life than extra money in their banks, the Intuit report shows.



In fact, personal saving rates among Americans today seem to mirror the soft savings trend.&nbsp;



According to the U.S. Bureau of Economic Analysis, Americans are saving less in 2023. The personal saving rate — the portion of disposable income one sets aside for savings — was significantly lower at 3.9% in August, compared to the 8.51% average in the past decade, according to data from Trading Economics which goes as far back as 1959.



One of the reasons for a drop in personal savings is the rebound from the Covid-19 pandemic, said Ryan Viktorin, vice president financial consultant at Fidelity Investments, a financial services corporation.



As&nbsp;Americans spent significantly lower during the pandemic in the last two to three years, people more are likely to spend a lot more now to make up for lost time, she told CNBC.



Additionally, inflation makes it harder for people to cover their expenses or save, Koehler said.



The decrease in personal saving rates also reflects a change in financial goals among workers today.&nbsp;



As younger people enter the workforce, they bring in new financial priorities and are more likely to embrace a “balance between the traditional ‘hustle’ to save every single penny and using some of their extra income to enjoy life now,” Viktorin said.



<h2 class="wp-block-heading"><a></a>Retiring and savings</h2>



Retirement is the grand finale for most workers. However, more are concerned they may not be able to retire at all.&nbsp;



A report by Blackrock shows that in 2023, only 53% of workers believe they are on track to retire with the lifestyle they want. A lack of retirement income, worries over market volatility and high inflation were some of the reasons cited for a lack of confidence about retirement among workers.



Younger workers also share the same sentiments, where two in three Gen Z are not sure if they will ever have enough money to retire.&nbsp;



However, this fear may not be that much of a concern for the younger generation, as most are actually looking to retire early — or to retire at all, the report by Intuit showed.



Additionally, the Transamerican Center for Retirement Studies found that almost half the working population either expects to work past the age of 65, or do not have plans to retire.



Traditionally, retiring entails leaving the workforce permanently. However, experts found that the very definition of retirement is also changing between generations.



About 41% of Gen Z and 44% of millennials — those who are currently between&nbsp;27 and 42 years old — are significantly more likely to want to do some form of paid work during&nbsp;retirement.



That’s higher than the 31% of Gen X (those born between 1965 to 1980) and 21% of Baby Boomers (born between 1946 to 1964) surveyed, the report by the Transamerican Center for Retirement Studies showed.&nbsp;



This increasing preference for a lifelong income, could perhaps make the act of “retiring” obsolete.&nbsp;



Although younger workers don’t intend to stop working, there is still an effort to beef up their retirement savings.



Fidelity’s second quarter retirement analysis found that millennials and Gen Z’s are still major beneficiaries of the 401(k) saving plan, a retirement savings plan offered by American employers that has tax advantages for the saver.



The report revealed that in the second quarter of last year, the average 401(k) balances were up by double digits for Gen Z and millennials — Gen Z saw a 66% increase and millennials had 24.5% increase.



<h2 class="wp-block-heading"><a></a>What are people spending more on?</h2>



Still, one question remains: where are people directing their money as they spend more and save less?



The study by Intuit found that millennials and Gen Z are more willing to spend on hobbies and make non-essential purchases compared to Gen X and boomers.



About 47% of millennials and 40% of Gen Z expressed a need to have money to pursue their passion or hobby, compared to only 32% of Gen X and 20% of boomers. 



Experts highlighted travel and entertainment as some of the non-essential experiences the younger generation is prioritizing.



Andy Reed, head of investor behavior at investment management firm&nbsp;Vanguard, said Gen Z’s spending on entertainment increased to 4.4% in 2022, compared to 3.3% in 2019.



In addition, Americans are “re-focused” on post-pandemic travel, a possible reason why there is a decrease in personal saving rates, said Fidelity’s Viktorin.



Although the younger generation is saving less, it doesn’t mean they are living paycheck to paycheck.&nbsp;



In fact, “Gen Z appear to be living within their means, and their increased spending seems to reflect rising costs of essentials more than a rising taste for luxury,” Reed noted.&nbsp;



“Spending money on things that truly make you happy is great … [but] people should satisfy their near-term needs and stay on-track with their long-term goals before spending freely,” he added.

107318937-1697610036289-gettyimages-1221975332-dsc_3504

Say goodbye to retirement? A ‘soft saving’ trend is emerging among young people

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107320246-16977353202023-10-19t170313z_1243074500_rc2sv3al61dp_rtrmadp_0_usa-fed-powell-820x461.jpeg" alt="" class="wp-image-428381" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107320246-16977353202023-10-19t170313z_1243074500_rc2sv3al61dp_rtrmadp_0_usa-fed-powell-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107320246-16977353202023-10-19t170313z_1243074500_rc2sv3al61dp_rtrmadp_0_usa-fed-powell-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107320246-16977353202023-10-19t170313z_1243074500_rc2sv3al61dp_rtrmadp_0_usa-fed-powell-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107320246-16977353202023-10-19t170313z_1243074500_rc2sv3al61dp_rtrmadp_0_usa-fed-powell-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107320246-16977353202023-10-19t170313z_1243074500_rc2sv3al61dp_rtrmadp_0_usa-fed-powell-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107320246-16977353202023-10-19t170313z_1243074500_rc2sv3al61dp_rtrmadp_0_usa-fed-powell.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Federal Reserve Chairman Jerome Powell acknowledged recent signs of cooling inflation, but said Thursday that the central bank would be “resolute” in its commitment to its 2% mandate.



In a widely anticipated speech delivered to the Economic Club of New York, Powell evaded committing to a specific policy path but gave no indication that he was leaning toward a push higher for interest rates.



As Powell spoke, futures market traders erased any possibility of a rate hike in November and decreased the chances of a move even in December. He acknowledged the progress made toward bringing inflation back down to a manageable level but stressed vigilance in pursuing the central bank’s goals.



“Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said in prepared remarks. “We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.”



“While the path is likely to be bumpy and take some time, my colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent,” Powell added.



The speech comes with questions over where the Fed heads from here after a succession of interest rate hikes aimed at cooling inflation. Stocks turned higher after Powell spoke and the 10-year Treasury yield backed off its highs for the session.



Powell said he doesn’t think rates are too high now.



“Does it feel like policy is too tight right now? I would have to say no,” he said. Still, he noted that “higher interest rates are difficult for everybody.”



Powell noted the progress made toward the Fed’s twin goals.



In recent days, data has shown that while inflation remains well above the target rate, the pace of monthly increases has decelerated and the annual rate has slowed to 3.7% from more than 9% in June 2022.



“Incoming data over recent months show ongoing progress toward both of our dual mandate goals —maximum employment and stable prices,” he said.



The speech was delayed at the onset by protesters from the group Climate Defiance who charged the dais at the club’s dinner and held up a sign saying “Fed is burning” surrounded by the words “money, futures and planet.”



After a short delay, Powell noted the labor market and economic growth may need to slow to ultimately achieve the Fed’s goal.



“Still, the record suggests that a sustainable return to our 2 percent inflation goal is likely to require a period of below-trend growth and some further softening in labor market conditions,” Powell said.



Fed officials have been using interest rate hikes in part to try to level out a supply-demand imbalance in the jobs market. The Fed has raised rates 11 times since March 2022 for a total of 5.25 percentage points. Coming from the near-zero level for the fed funds rate, that has taken the benchmark rate to its highest level in some 22 years.



“We’re very far from the effective lower bound, and the economy is handling it just fine,” Powell said.



The comments come the same day initial jobless claims hit their lowest weekly level since early in 2023, indicating that the labor market is still tight and could exert upward pressure on inflation.



Robust job creation in September and a slow pace of layoffs could put progress on inflation at risk.



“Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy,” he said.



In recent days, other Fed officials have said they think the Fed can be patient from here. Even some members who favor tighter monetary policy have said they think the Fed can halt rate hikes at least for now while they watch the lagged impact the rate hikes are expected to have on the economy.



Markets widely expect the Fed to hold off on additional rate hikes, though there remain questions over when officials might begin cutting rates.



Powell was noncommittal on the future of policy.



Given the uncertainties and risks, and how far we have come, the Committee is proceeding carefully. We will make decisions about the extent of additional policy firming and how long policy will remain restrictive based on the totality of the incoming data, the evolving outlook, and the balance of risks,” he said.

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Powell says inflation is still too high and lower economic growth is likely needed to bring it down

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107311996-1696509877442-gettyimages-1248374546-US_JOB_FAIR-820x461.jpeg" alt="" class="wp-image-428364" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107311996-1696509877442-gettyimages-1248374546-US_JOB_FAIR-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107311996-1696509877442-gettyimages-1248374546-US_JOB_FAIR-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107311996-1696509877442-gettyimages-1248374546-US_JOB_FAIR-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107311996-1696509877442-gettyimages-1248374546-US_JOB_FAIR-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107311996-1696509877442-gettyimages-1248374546-US_JOB_FAIR-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107311996-1696509877442-gettyimages-1248374546-US_JOB_FAIR.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Jobseekers during a Construction Career Fair at Cape Fear Community College in Wilmington, North Carolina, US, Wednesday, March 15, 2023.  Allison Joyce | Bloomberg | Getty Images</figcaption></figure>



Initial filings for unemployment benefits dipped last week, indicating that the U.S. labor market remains tight and a potential factor in persistent inflation.



Weekly jobless claims totaled a seasonally adjusted 198,000 for the period ended Oct. 14, the Labor Department reported Thursday. That marked a decline of 13,000 from the previous week and was below the Dow Jones estimate for 210,000. It was the lowest weekly level since Jan. 21.



Claims have been in a general deceleration pattern since the summer, but some economists worry that could change. Announced layoffs have been on the rise in recent weeks, indicating that the tide of lower claims could turn soon.



Continuing claims, which run a week behind, totaled 1.734 million, up 29,000 from the previous week and higher than the FactSet estimate for 1.698 million.



The labor market has been a critical factor in the Federal Reserve’s deliberations over monetary policy. Officials worry that a still-tight labor market could provide upward pressure on prices even after the central bank has raised rates 11 times totaling 5.25 percentage points since March 2022.



Markets were awaiting a speech later in the day from Fed Chair Jerome Powell, who is expected to provide some guidance on where policymakers head from here.



Following the report, stock market futures were mixed while Treasury yields held higher.



The labor market thus far has shown few effects of the United Auto Workers strike as well as other labor unrest. Claims spiked briefly over the summer but have been in a generally declining pattern since early August, holding in a range below 230,000 in recent weeks.



This week’s report covers the survey week the Labor Department uses for its nonfarm payrolls report.



In other economic news Thursday, the Philadelphia Fed reported its manufacturing index rose 5 points in October but remained in contraction territory at -9, lower than the -6.8 forecast. The survey gauges companies reporting expansion against contraction, so any reading below zero indicates contraction.



New orders, shipments and employment all turned positive after being in negative territory for September.

107311996-1696509877442-gettyimages-1248374546-US_JOB_FAIR

U.S. weekly jobless claims total 198,000, fewer than expected

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-820x547.jpg" alt="" class="wp-image-420977" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107076508-1667332344080-jer-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">U.S. Federal Reserve Board Chairman Jerome Powell takes questions from reporters after the Federal Reserve raised its target interest rate by three-quarters of a percentage point to stem a disruptive surge in inflation, during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, June 15, 2022.
Elizabeth Frantz | Reuters</figcaption></figure>



Federal Reserve Chair&nbsp;<a href="https://www.cnbc.com/jay-powell/">Jerome Powell</a>&nbsp;is set to deliver what could be a key policy address Thursday, in which he will be tasked with convincing markets the central bank is committed to keep hammering away at inflation, but perhaps now needs a little less force.



The top monetary policymaker will speak at noon ET to the Economic Club of New York at a critical time for the U.S. economy.



Inflation numbers <a href="https://www.cnbc.com/2023/09/29/pce-inflation-august-2023-good-news-for-inflation-hawks.html">have been improving</a> lately, but Treasury yields have been surging, sending conflicting messages about where monetary policy might be headed. Markets largely expect the Fed to stay on hold with rates, but they will be looking to Powell for confirmation and clarification on how officials view both current conditions and longer-term trends.



“Powell is always tacking back to whatever helps feed the narrative that they need to stay vigilant, and for understandable reasons,” said Luke Tilley, chief economist at Wilmington Trust. “I just expect him to keep talking about the strength of the economy and the surprising strength of the consumer in the third quarter as a risk for inflation. That is enough ammunition to keep talking about staying vigilant.”



Essentially, Tilley expects the Powell message to break into three parts: The Fed needed to get rates high quickly, which it did; that it had to find a peak level, which is part of the current debate; and that it needs to figure out how long rates need to stay this high to get inflation back to its 2% target.



“Really, their ultimate goal is to keep financial conditions tight so inflation comes down,” he said. “He’s going to use that framework, even if he’s dovish about Nov. 1 (the next Fed rate decision) or December to shift the hawkishness to that third question of how long to keep them this high.”



“Higher for longer” has become an unofficial mantra in recent days, with Philadelphia Fed President Patrick Harker&nbsp;<a href="https://www.cnbc.com/2023/10/13/philadelphia-fed-president-harker-advocates-holding-interest-rates-where-they-are.html">earlier this week mentioning the term</a>&nbsp;specifically for how he feels about policy.



Harker was one of several Fed officials, including governors Philip Jefferson, who&nbsp;<a href="https://www.federalreserve.gov/newsevents/speech/jefferson20231009a.htm" target="_blank" rel="noreferrer noopener">spoke earlier this month</a>, and Christopher Waller,&nbsp;<a href="https://www.cnbc.com/2023/10/18/feds-waller-says-officials-can-wait-watch-and-see-before-acting-on-interest-rates.html">who spoke Wednesday</a>, to advocate holding off on rate hikes at least in the immediate future while they weigh the effects of incoming data. Waller said the Fed can “wait, watch and see” before it moves on rates.



Powell is expected to join the chorus Thursday, even if his message is filled with caveats about not becoming complacent in the fight against inflation.



“Powell has to present himself to investors as the dispassionate neutral leader and allow [others] to be more aggressive,” said Jeffrey Roach, chief economist for LPL Financial. “They’re not going to declare victory, and that is one reason why Powell is going to continue to talk somewhat hawkish.”



To that point, New York Fed President John Williams on Wednesday moved some of the way there, when he repeated another familiar mantra, that the Fed will have to keep the “restrictive stance of policy in place for some time” to deal with inflation, according to a Reuters report.



Similar to the other speakers, Powell likely will reiterate a data-dependent focus for the Fed after a much more aggressive path in which it has raised its benchmark borrowing rate 11 times for a total of 5.25 percentage points, its highest level in 22 years. The Fed&nbsp;<a href="https://www.cnbc.com/2023/10/11/fed-minutes-october-2023-.html">opted not to hike</a>&nbsp;in September.



He also, though, will be looked to for some guidance as to how he feels about rising yields, in light of the&nbsp;<a href="https://www.cnbc.com/2023/10/18/30-year-fixed-mortgage-rate-just-hit-8percent-for-the-first-time-since-2000.html">10-year Treasury having inched closer to 5%</a>, its highest point in 16 years.



The chair “will stick to the message … that the data has been coming in stronger than expected, but there has also been a big move in yields, which has tightened financial conditions, so no urgency for a policy response in November and the Fed can adopt a wait-and-see approach,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a client note.



Guha said that a Fed on hold now will only be a “down payment” on “extra cuts” in rates for 2024 as inflation and economic growth both weaken.

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Fed Chair Powell to deliver key speech Thursday. Here’s what to expect

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="543" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/BKEQXPVXKFIALBTT7X3G6DN3RM-820x543.jpg" alt="" class="wp-image-428329" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/BKEQXPVXKFIALBTT7X3G6DN3RM-820x543.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/BKEQXPVXKFIALBTT7X3G6DN3RM-300x199.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/BKEQXPVXKFIALBTT7X3G6DN3RM-136x90.jpg 136w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/BKEQXPVXKFIALBTT7X3G6DN3RM-768x509.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/BKEQXPVXKFIALBTT7X3G6DN3RM-1536x1018.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/BKEQXPVXKFIALBTT7X3G6DN3RM-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">U.S. President Joe Biden walks as he departs Joint Base Andrews for a high-stakes visit to Israel, in Maryland, U.S., October 17, 2023. REUTERS/Evelyn Hockstein</figcaption></figure>



WASHINGTON, Oct 17 (Reuters)&nbsp;&#8211;&nbsp;U.S. President Joe Biden left Washington Tuesday evening on a whirlwind trip that was originally expected to touch down in Israel for an update on Israel&#8217;s war aims in its battle with Hamas militants, and then Jordan, to stress the need to get humanitarian assistance to Gaza civilians.



A strike on a Gaza hospital late on Tuesday that killed hundreds of Palestinians saw Arab leaders call off their planned summit with Biden in Jordan however, and that leg of the trip cancelled.



MEETING WITH ISRAEL&#8217;S NETANYAHU BUT NOT ARAB LEADERS



Biden is spending part of Wednesday in Tel Aviv for talks with Israeli Prime Minister Benjamin Netanyahu and other officials as Israel prepares a ground offensive aimed at eliminating Hamas militants in Gaza who killed 1,300 people during a rampage through southern Israeli towns on Oct. 7.



Biden will no longer fly to Amman for talks about humanitarian assistance after Jordan&#8217;s King Abdullah cancelled a summit with Egyptian President Abdel Fattah al-Sisi, and Palestinian President Mahmoud Abbas.



Abbas, who has long been opposed to Hamas and whose organization exercises limited self-rule in the Israeli-occupied West Bank, said after the Gaza hospital strike he would not meet the U.S. President.



Palestinian authorities say Israel is responsible for the strike, Israel said the blast was caused by a failed rocket launch by the Palestinian Islamic Jihad militant group, which denied blame. Biden backed Israel&#8217;s account.



<h2 class="wp-block-heading" id="h-humanitarian-concerns-in-gaza">HUMANITARIAN CONCERNS IN GAZA</h2>



Biden&#8217;s second trip to a war zone this year &#8211; he visited Ukraine in February &#8211; carries some risk. His goal was originally to show American solidarity with Netanyahu while trying to avoid a broader regional war involving Iran and its Lebanese ally Hezbollah and Syria.



How he accomplishes that balance while meeting only Netanyahu and Israeli officials is unclear.



The United States has stationed a carrier strike group in the eastern Mediterranean in a show of force for Israel and a second is on the way.



Biden also wants to avert a humanitarian calamity in Gaza where authorities say thousands have already been killed in Israeli bombardment over the last week.



Hundreds of tons of aid from several countries have been waiting in Egypt&#8217;s Sinai peninsula for days pending a deal for its safe delivery to Gaza and the evacuation of some foreign passport holders through the Rafah crossing.



&#8220;He&#8217;ll make it clear that we want to continue working with all our partners in the region, including Israel, to get humanitarian assistance in and provide some kind of safe passage for civilians to get out,&#8221; said White House national security spokesperson John Kirby.



<h2 class="wp-block-heading" id="h-israel-red-lines">ISRAEL RED LINES</h2>



Biden and Netanyahu, thrown into a wartime partnership despite deep political differences on the way forward in the Middle East, have joined forces.



Biden has given Israel full-throated support while stressing the need to head off a massive humanitarian crisis in Gaza.



Their face-to-face meeting, after several phone calls since the attacks, will allow Biden to privately discuss concerns and possible red lines in the coming Gaza invasion.



Biden will also get an update on the scores of hostages taken by Hamas. The State Department has said 29 citizens of the United States were killed in the Hamas attacks, with 15 citizens and one lawful permanent resident unaccounted for.



Israel has vowed to annihilate the Hamas movement.



Biden will make clear that &#8220;Israel has the right and indeed the duty to defend its people from Hamas and other terrorists and to prevent future attacks,&#8221; Secretary of State Antony Blinken told reporters in Tel Aviv.



He said Israel would brief Biden on its war aims and strategy and how it will conduct operations &#8220;in a way that minimizes civilian casualties and enables humanitarian assistance to flow to civilians in Gaza in a way that does not benefit Hamas.&#8221;



The U.S. and Israel agreed to develop a plan that will enable humanitarian aid from donor nations and multilateral organizations to reach civilians in Gaza, Blinken said.



(Reporting By Steve Holland; additional reporting by Humeyra Pamuk in Tel Aviv; Editing by Raju Gopalakrishnan, Heather Timmons, Alexandra Hudson)

U.S. President Biden departs Joint Base Andrews for a high-stakes visit to Israel

Biden’s Israel visit focuses on Netanyahu after Arab summit cancelled

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318903-1697602700881-gettyimages-1730510609-AFP_33YK49A-820x462.jpeg" alt="" class="wp-image-428296" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318903-1697602700881-gettyimages-1730510609-AFP_33YK49A-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318903-1697602700881-gettyimages-1730510609-AFP_33YK49A-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318903-1697602700881-gettyimages-1730510609-AFP_33YK49A-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318903-1697602700881-gettyimages-1730510609-AFP_33YK49A-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107318903-1697602700881-gettyimages-1730510609-AFP_33YK49A.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Russia’s President Vladimir Putin and Chinese President Xi Jinping walk side by side to a group photo session during the third Belt and Road Forum for International Cooperation at the Great Hall of the People in Beijing on Oct. 18, 2023. Grigory Sysoyev | AFP | Getty Images</figcaption></figure>



In a rare international appearance since the war in Ukraine, Russian President Vladimir Putin addressed a live audience at the third Belt and Road forum in Beijing on Wednesday.



In the opening ceremony speech, Putin invited other countries to participate in the development of the Northern Sea Route. The meeting marks the 10th anniversary of the Belt and Road Initiative summit.



Speaking to 1,000 delegates representing over 130 countries, Putin said he agreed with Chinese President Xi Jinping that the Belt and Road idea “folds logically within multilateral efforts” to increase global cooperation.



“In the European part of Russia, we form an international north-south corridor &#8230; It connects Russian ports in the Baltic and Arctic with the ports on the coast of the Persian Gulf and the Indian Ocean along the entire route from our northern city,” Putin said according to a Google translation of his prepared remarks.



The Northern Sea Route is a 3,480 mile-long shipping route between the Pacific and Atlantic oceans which runs from the entrances of Novaya Zemiya straits in the west along the Russian Arctic Coast above Siberia.



Additionally, Moscow is working with foreign partners to also build railway routes from Central Siberia south toward China, Mongolia, and other ports of the Indian and Pacific Oceans, said Putin.



“Russia is the biggest country in the world,” Putin said. “That is why the connectivity of all the partners is relevant for the relations between the partners.”



Russia has a total area of 17,098,242 km², the largest in the world.



The successful development of the NSR “would potentially make Russia critical to global trade and communications between Asia and Europe,” according to an analysis by Foreign Policy.



Putin met Chinese counterpart Xi Jinping on Wednesday in Beijing in efforts to strengthen their “no-limits” partnership, against the backdrop of an escalating Middle East conflict and the ongoing Ukraine war.



Putin added that the “One Belt, One Road” initiative is consistent with Russian ideas to “create an integration circuit where freedom of trade, investment, and labor would be fully ensured.”



This marks Putin’s third attendance at the Belt and Road Forum, with the previous two held in 2017 and 2019.



In his opening address, Xi emphasized the progress made by the initiative, which he said would receive billions in new funds.



“The China Development Bank and the Export-Import Bank of China will each set up a 350 billion yuan ($47.9 billion) financing window,” Xi said. This will be on top of an additional 80 billion yuan which will be injected into the Silk Road Fund.



Xi added that China will continue to deepen cooperation in areas such as green infrastructure and green transportation to support the BRI International Green Development Coalition.



Xi and Putin are also set to hold bilateral talks Wednesday.



In the decade since Xi launched the Belt and Road Initiative, new infrastructure investments have helped extend China’s influence in the developing world.

107318903-1697602700881-gettyimages-1730510609-AFP_33YK49A

Russia’s Putin speaks at China’s Belt and Road forum in rare international appearance

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107317953-1697478459810-gettyimages-1417002156-dsc08657-820x547.jpeg" alt="" class="wp-image-428251" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107317953-1697478459810-gettyimages-1417002156-dsc08657-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107317953-1697478459810-gettyimages-1417002156-dsc08657-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107317953-1697478459810-gettyimages-1417002156-dsc08657-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107317953-1697478459810-gettyimages-1417002156-dsc08657-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107317953-1697478459810-gettyimages-1417002156-dsc08657-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/107317953-1697478459810-gettyimages-1417002156-dsc08657-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Martin-dm | E+ | Getty Images</figcaption></figure>



Gen Zers are cutting back on spending.



More than half, 53%, say a high cost of living is a barrier to their financial success, according to a new survey from Bank America.



Nearly 3 in 4 young adults surveyed, 73%, have changed their spending habits amid record-high inflation.



“Many of them are buckling down,” said AJ Barkley, head of neighborhood and community lending at Bank of America, calling the results “good news.”



Among the changes they are making include cooking at home more frequently, with 43%; spending less on clothes, 40%; and limiting grocery shopping to essentials, 33%.



Most plan to keep up those changes in the next year, according to the firm’s August survey of almost 1,200 young adults ages 18 to 26.



<h2 class="wp-block-heading" id="h-gen-z-faces-unique-financial-challenges"><a></a>Gen Z faces unique financial challenges</h2>



Yet, more than a third of young Gen Zers have also faced setbacks in the past year, the survey found, which may have led them to stop saving or take on more debt.



Gen Z faces unique financial challenges compared to older generations. College graduates earn 10% less compared to their parents, recent research found.



High inflation — and affordability concerns among Gen Zers — extend beyond U.S. borders. A Deloitte survey released earlier this year that included about 14,500 members of Gen Z in 44 countries found living paycheck to paycheck was a concern cited by about half of that generation, with 51%; followed by needing to take on a side job, 46%; and cost of living, 35%.



<h2 class="wp-block-heading"><a></a>‘This is really the time to build a solid foundation’</h2>



But there is good news, according to Bank of America’s research. Most respondents feel confident they can manage their day-to-day expenses, budget and credit. Yet, they show less confidence when it comes to saving for retirement or investing in the stock market, the results found.



“This is really the time to build a solid foundation that is going to allow you to be successful throughout the many next decades of your financial life,” said Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth in New York. Boneparth is also a member of the CNBC Financial Advisor Council.



Experts say these three tips can help members of Gen Z learn to manage their money wisely.



<h2 class="wp-block-heading">1. Make saving a habit</h2>



More than half of Gen Z, 56%, do not have enough emergency savings to cover three months’ worth of expenses, Bank of America’s survey found.



It’s a good idea to sock away any extra cash you can, said Boneparth, and to think about what’s important to you to stay motivated.



“Get in the habit of being a consistent saver,” Boneparth said.



Having that cash cushion set aside can help you continue to pursue your goals, even as life throws surprises your way. “It’s never a straight line,” Boneparth said.



<h2 class="wp-block-heading"><a></a>2.&nbsp;Start investing for retirement now</h2>



While retirement may seem like a far-off goal, especially in the early years of your career, it’s actually when you have your biggest advantage to accumulate wealth, according to Barkley.



Any money you invest now will have more time to accumulate gains that compound over time.



“They should be thinking about retirement now,” Barkley said.



To get started, an employer-provided 401(k) may help with those initial contributions and may even include an extra boost from a company match, if offered.



Young investors may also open an individual retirement account on their own. Experts often recommend making post-tax contributions to a Roth IRA early on, as you may be prohibited from contributing to those accounts later in your career when your income is higher.



<h2 class="wp-block-heading"><a></a>3.&nbsp;Resist the urge to give into FOMO</h2>



Gen Z women are more apt to feel pressured to spend to keep up with their social circles, Bank of America found.



Social media is a big driver of those feelings, with 41% of women Gen Zers saying their feeds make them wish they had more money for nonessential spending, versus just 24% of men.



All Gen Zers would be wise to avoid that FOMO, according to Ted Jenkin, a CFP and CEO of oXYGen Financial in Atlanta. Jenkin is also a member of the CNBC FA Council.



“Your friends are not posting their net worth on Instagram and TikTok, so be wary that people may not be doing as well as they appear on social media,” Jenkin said.



It also doesn’t hurt to avoid credit card debt and to check your credit score regularly, Jenkin said.

107317953-1697478459810-gettyimages-1417002156-dsc08657

53% of Gen Z see high cost of living as a barrier to financial success. They’re ‘buckling down,’ expert says

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/XMA74BECSVMEFNVFISULDFPLHI-820x547.jpg" alt="" class="wp-image-428240" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/10/XMA74BECSVMEFNVFISULDFPLHI-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/XMA74BECSVMEFNVFISULDFPLHI-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/XMA74BECSVMEFNVFISULDFPLHI-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/XMA74BECSVMEFNVFISULDFPLHI-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/XMA74BECSVMEFNVFISULDFPLHI-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/10/XMA74BECSVMEFNVFISULDFPLHI-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Indonesian President Joko Widodo arrives at Beijing Capital International Airport to attend the Third Belt and Road Forum in Beijing, China, October 16, 2023. Ken Ishii/Pool via REUTERS</figcaption></figure>



BEIJING, Oct 16 (Reuters) &#8211; When China launched its Belt and Road Initiative 10 years ago, it touted huge infrastructure spending linking it with Western Europe, which as recently as 2019, Britain&#8217;s then-finance minister said had &#8220;tremendous potential to spread prosperity and sustainable development&#8221;.



Ten years on, the most senior EU leader expected to attend the third Belt and Road (BRI) Summit this week is Hungary&#8217;s populist Viktor Orban, who will join guests including Russia&#8217;s Vladimir Putin and a minister of the Afghan Taliban.



Western scepticism of the cornerstone of President Xi Jinping&#8217;s ambition to extend China&#8217;s global influence stems from China&#8217;s failure to assuage concern over its intentions, and whether there is in fact a gap this infrastructure would be filling, compounded by concern over a lack of transparency, analysts say.



Such Western doubts have coincided with Xi&#8217;s assertive leadership and a deterioration in ties over trade, human rights, COVID-19 and Taiwan. Italy, the only Group of 7 nation to sign on to the scheme, is now looking for a way out.



&#8220;Go back to 2013 &#8211; China was absolutely ascendant &#8211; Xi Jinping was forecasting a windfall from Chinese firms expanding throughout the world, but a number of serious shocks really affected the reach and breadth of the BRI,&#8221; said Matthew Erie of the University of Oxford.



<figure class="wp-block-image"><img decoding="async" src="https://graphics.reuters.com/CHINA-BRI/xmpjleajxpr/chart.png" alt="Reuters Graphics"/><figcaption class="wp-element-caption">Reuters Graphics</figcaption></figure>



The shocks include a trade war with the United States, Russia&#8217;s invasion of Ukraine, and the pandemic, said Erie. Other analysts say economic slowdown both in China and globally, and rising commodity prices, have also cast a pall over the initiative.



Facing such headwinds, Xi is pushing to make the BRI smaller and greener, and to move from big-ticket projects like dams to high-tech ones such as digital finance and e-commerce platforms. The aim is to aid a broader push for a world order that is multipolar and gives the global south more agency, rather than one dominated by Washington and its allies, analysts say.



<figure class="wp-block-image"><img decoding="async" src="https://graphics.reuters.com/CHINA-BRI/byprregekpe/China_BRI_investment.gif" alt="CHINA investment in BRI projects"/><figcaption class="wp-element-caption">CHINA investment in BRI projects</figcaption></figure>



China has at times bristled at criticism of the BRI, saying it carries anti-Chinese prejudice and a wish to contain its rise, while overlooking what it says are genuine good intentions.



China says more than 130 countries will attend this week, notably from Latin America and Africa, although, unlike in previous years, many more are sending ministers rather than heads of state.



<figure class="wp-block-image"><img decoding="async" src="https://graphics.reuters.com/CHINA-BRI/znvnznwqyvl/chart.png" alt="Reuters Graphics"/><figcaption class="wp-element-caption">Reuters Graphics</figcaption></figure>



On Monday, a hotel in downtown Beijing hosting delegations from Russia, Kazakhstan and Congo was buzzing with activity, its lobby decorated with displays of BRI goods and guarded by metal detectors at entrances.



<h2 class="wp-block-heading" id="h-insurmountable-problems">&#8216;INSURMOUNTABLE PROBLEMS&#8217;</h2>



More than $90 billion worth of Chinese commercial investment in BRI projects has faced &#8220;insurmountable problems&#8221;, according to data from the American Enterprise Institute think tank. The issues range from outright cancellation to indefinite delays, &#8220;mainly from political requirements and errors by Chinese firms&#8221;.



<figure class="wp-block-image"><img decoding="async" src="https://graphics.reuters.com/CHINA-BRI/znvnznwjyvl/chart.png" alt="Reuters Graphics"/><figcaption class="wp-element-caption">Reuters Graphics</figcaption></figure>



&#8220;From the Chinese perspective, the biggest problem is that they&#8217;ve realised now that they&#8217;re carrying an awful lot of debt in developing countries which are going to struggle to really pay it back,&#8221; said Raffaello Pantucci from the S.Rajaratnam School of International Studies in Singapore.



This is one reason the initiative has shrunk and is focused more on quality than quantity, say analysts. But the BRI is also more focused on issues like peace, climate change, energy crises and artificial intelligence, among many other areas, according to a Chinese government white paper released last week.



Ruby Osman, a China expert at the Tony Blair Institute for Global Change, said the summit would give China a chance to showcase some of the global initiatives that Xi has launched over the past two years.



In particular, she pointed to the Global Development Initiative, a $10 billion programme started in 2021 to promote &#8220;social and economic development&#8221;, similar schemes focused on security and &#8220;civilization&#8221;.



&#8220;These sort of mutually reinforcing initiatives are a way for, in Beijing&#8217;s eyes, to share Chinese governance ideals, to build consensus on Chinese norms and to start exporting elements of China&#8217;s development model,&#8221; Osman said.



The change in the BRI focus is apparent in China&#8217;s offer of assistance in recent months to Argentina, through doubling the amount it can access through a currency swap line to nearly $10 billion in a boost to its dwindling foreign currency reserves, and enabling it to pay back International Monetary Fund debt and purchase imports.



And last week, Beijing agreed to restructure loans owed by Sri Lanka and Zambia, in what appeared to be its latest demonstration of goodwill towards developing countries.



Wang Huiyao, president of the Center for China and Globalization think tank, said the BRI had &#8220;greatly pushed forward global awareness about the infrastructure deficit&#8221;.



&#8220;It&#8217;s not perfect, but it’s a process, and people are gradually realising it&#8217;s so important: we need to build infrastructure. And I think the importance of that is being realised,&#8221; Wang said.



(This story has been refiled to add the credit of the graphics journalist)



Additional reporting by Joyce Zhou; Graphics by Vineet Sachdev; Editing by Antoni Slodkowski, Don Durfee, Robert Birsel

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International

As Biden and Xi gear up for a high-stakes meeting, experts have low expectations

Powell says Fed is ‘not confident’ it has done enough to bring inflation down

China’s consumer prices swing to declines in October

Central banks look to have hit peak rates. Here’s how markets think they’ll come down

IMF revises up China’s 2023, 2024 GDP growth forecasts

WeWork, once valued at $47 billion, files for bankruptcy

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US to evict Gabon, Niger, Uganda and Central African Republic from trade program

North Korea’s closure of Africa embassies a sign of economic hardships – South’s ministry

Say goodbye to retirement? A ‘soft saving’ trend is emerging among young people

Powell says inflation is still too high and lower economic growth is likely needed to bring it down

U.S. weekly jobless claims total 198,000, fewer than expected

Fed Chair Powell to deliver key speech Thursday. Here’s what to expect

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53% of Gen Z see high cost of living as a barrier to financial success. They’re ‘buckling down,’ expert says

Leaders gather in China for smaller, greener Belt and Road summit

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