Creeping Inflation – Thunder From Under Mon, 16 May 2022 19:50:21 +0000 en-US hourly 1 Creeping Inflation – Thunder From Under 32 32 Gold faces new competition as real yields turn positive – USBWM Mon, 16 May 2022 17:01:00 +0000

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(Kitco News) – Gold market is finding some support at around $1,800 an ounce; However, according to a market strategist, the gold market faces renewed competition for the rest of the year as the Federal Reserve aggressively raises interest rates.

In an interview with Kitco News, Rob Haworth, senior investment strategist at US Bank Wealth Management, said that while inflation may have peaked, there are indications that core inflation will remain elevated through 2022, creating a difficult environment for the economy and financial markets.

In the current environment, Haworth said real assets remain an attractive hedge against inflation and market volatility.

“We’ve already seen significant multiple compression in the equity market, and that means we think we need to look at ways to move our cash flow forward, and real assets has been a key way for us to do that. “, did he declare. .

However, Haworth added that he does not see gold as an attractive real asset. He said he sees gold continuing to struggle through 2022 as the Federal Reserve plans to raise interest rates to potentially 3% by December.

The US central bank has signaled it may raise interest rates by 50 basis points over the next two weeks, and markets are pricing in the possibility of a 50 basis point move in the next three meetings.

Haworth explained that if inflation holds, rising nominal interest rates will mean that real interest rates will begin to rise.

“If we think about the last three years, one of the things that has helped gold has been negative real interest rates. We don’t have a whole curve in positive territory, but now we’re starting to see rates positive, real interest rates will start to divert some of that demand away from gold,” he said. “Investors looking for a safe haven can now find it in certain duties.”

The only thing that could reverse gold’s current downtrend is if the Federal Reserve were forced to halt and even reverse its current monetary policy plans, Haworth said.

However, he added that even if the economy slows, it should have enough momentum to avoid a recession. He said a strong U.S. labor market and healthy consumer demand are supporting economic growth, albeit at lower levels.

“There is room for the economy to work,” he said.

Although gold is not on Haworth’s list of investments, he said it makes sense for investors to have commodities in their portfolios. He added that he likes the energy sector as he expects oil and gas prices to remain high.

However, at the top of its list of investments is global infrastructure; USBWM is overweight these assets.

“There’s this demand story playing out. Even though global economic growth may be slower for the rest of the year, a further reopening of easing supply chains probably changes the story a bit. demand,” he said.

Haworth said there are mutual funds and ETFs that offer investors exposure to global infrastructure such as toll roads, airports, water treatment facilities, cell towers and data centers. data.

“We’ve been biased domestically for a while, but from an infrastructure perspective there seem to be some benefits to being global,” he said.

Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

It will take a lot more to ‘level’ the UK – POLITICO Sun, 15 May 2022 02:14:03 +0000

Brian Groom is a former associate editor of the Financial Times and is the author of “Northerners: A History, from the Ice Age to the Present Day” (HarperNorth).

Northern England, where textile mills, coal mines, shipyards and steel mills once led the world in the Industrial Revolution, is once again in the spotlight.

Now a key proving ground for regeneration – which the developed world still grapples with – the future of the region will have significant political and economic consequences for Britain.

For decades, countries have been trying to revive former industrial regions, with mixed results. Regional disparities within advanced countries have been widening since the late 1980s, according to the International Monetary Fund. programs have had partial and temporary benefits, overall they have failed to stem the region’s relative decline.

The North’s share of Britain’s economic output has fallen from 30% after World War I to around 20% today – the reverse of London and the South East’s growth. Despite this, the economy of the North remains larger than that of countries like Argentina, Belgium, Denmark, Ireland, Norway and Sweden, and if it underperforms, the whole economy British is held back.

Prime Minister Boris Johnson has promised, amid some skepticism, to ‘level out’ the UK’s economy, which is home to some of the biggest geographical disparities in productivity, pay, skills and health in the world. all the great nations. A difficult task amid rising inflation, pressure on living standards and the fallout from war in Ukraine – and all as the UK tries to carve out a future outside the Union European.

In this sense, the Johnson government has set itself ambitious medium-term objectives. In a recent white paperhe proposed 12 ‘missions’, including a commitment that ‘by 2030 employment and productivity will have increased in every region of the UK, each containing a globally competitive city, and l “gap between the best performing regions and the others will close”.

The document’s goals were widely welcomed, but critics warned that a lack of detailed implementation, lack of funding and a cautious approach to decentralization would make them difficult to achieve.

Johnson’s Tories made a major push into the traditionally Labor-voting north in the last general election of 2019 – almost half of their gains were in so-called ‘red wall’ seats in the north, midlands and south. North East Wales And to keep those seats, Johnson must now persuade voters in the North that the tide is turning.

But being able to do so will also be complicated by the UK’s withdrawal from the EU.

EU regional programs have helped fund a host of projects, including the Echo Arena in Liverpool and the National Football Museum in Manchester, as well as business centres, technology centres, vocational training, housing upgraded and renewable energy, environmental and broadband projects. And even if the government replaces money with a Shared Prosperity FundNorthern think tanks still complain of a miss to win over the next three years.

In truth, however, while valuable, neither the EU programs nor the British government’s regeneration efforts have narrowed the economic divide.

Could other European countries offer useful lessons?

Without a doubt, the most spectacular regeneration effort of modern times has been The revival of East Germany.

At the time of reunification in 1990, output per worker was around 60% of the level of the former West Germany, but it is now 85%. The programs implemented have included social spending, infrastructure and business support. Basically, there was cross-party support and the projects were designed to last for decades.

German reunification was, of course, exceptional. The cost is estimated at hit 2,000 billion euros, partly financed by a solidarity tax on German adults. The UK’s £4.8 billion Upgrade funds and £3.6 billion Cities funds look puny in comparison. And it seems unlikely that resources will be available on a scale comparable to that of Germany.

Another question is whether sufficient powers and funding will be devolved to mayors and councils. The white paper invites nine English regions to apply for devolution deals, and some current mayors in places such as Greater Manchester and the West Midlands will be offered additional powers, similar to those in London.

However, little fiscal autonomy is offered here. According to the Institute for Government think tank, over the past decade central government grants to councils have been cut by 37% in real terms.

The picture is not entirely bleak for the North, however. Its major cities, including Manchester, Leeds, Newcastle and Liverpool, have revived to a degree few would have predicted in the 1980s – although they still struggle with deprivation.

These achievements have all involved a partnership between local elected officials and businesses and also, to some extent, central government. And while former mining towns, coalfields and seaside towns are more difficult to revive and may require different policies, the same type of partnership seems essential.

To date, regeneration policy in England has been hampered by lukewarm plans that have chopped and changed with each change of government, and even prime minister. Johnson’s “leveling up” follows “rebalancing” and the “Northern Powerhouse” under David Cameron.

But it is the people who live and work in an area who know best what it needs. And a successful recovery of the North must involve public-private partnership, significant investment, long-term programs, multi-stakeholder support, central government buy-in and local autonomy.

The North of England has contributed so much to the global economy and culture, whether through engineers like Richard Arkwright, inventor of the hydraulic framework for cotton spinning and developer of the factory system, and George Stephenson , father of the railroad, or social reformers like Josephine Butler, women’s suffrage activists like Emmeline Pankhurst, and writers like the Brontës and William Wordsworth.

The North knows what is best for it, and it also knows not to place its future solely in the hands of national politicians. True revival is unlikely to occur unless it involves the talents, energy and entrepreneurship of northerners themselves.

Mortgage rates climb with Lagarde hinting at ECB hike in July Wed, 11 May 2022 11:31:00 +0000

Mortgage interest rates have started to climb ahead of what is expected to be a rise in European lending rates in the coming months.

he new rate figures come as European Central Bank President Christine Lagarde today hinted that the Frankfurt-based institution could raise interest rates from historic lows as early as July as the Inflation in the Eurozone is skyrocketing.

Mortgages there continue to be among the most expensive in the euro zone, according to March figures from the Central Bank of Ireland.

Irish mortgage rates remain the second highest in the eurozone, meaning borrowers are paying €2,100 a year more than the currency bloc average.

March figures show Irish borrowers, which include first-time buyers and movers, paid an average rate of 2.78% in the month.

This is an increase of 0.2 percentage points from the previous month.

And there was a huge increase in the average rate in the euro zone. It rose 0.9 percentage points in March to 1.46%, the highest level in more than two and a half years.

Experts said the medium-term outlook calls for higher rates.

Ireland’s 2.78pc rate on new mortgages in Ireland is second only to Greece in the eurozone of 19 countries.

Last week, the cheapest lender in the market, Avant Money, said it was raising its fixed rates. It comes after ICS Mortgages increased its rates.

However, Permanent TSB, Bank of Ireland and EBS have recently cut some of their rates.

The rate change moves precede an expected rate hike by the European Central Bank (ECB) this summer, with a total of three hikes now possible by the end of this year.

Three ECB rate hikes could add €1,000 to the cost of servicing a typical one-year variable or tracker mortgage. It would also make the new fixed rates more expensive.

Daragh Cassidy of price comparison site said inflation was 7.5% in the euro zone, making rising rates a certainty.

“Central banks in the US, UK, Australia and New Zealand have all hiked rates recently to help curb rapidly rising prices, and it’s only a matter of time before that the ECB does not feel obliged to do the same. But when and by how much is the big question.

However, he said Irish mortgage rates are so out of step with the ECB base rate that we could see a slight increase in the ECB rate being absorbed by lenders rather than being passed on to floating rate consumers. .

“It will depend somewhat on the competitive pressures faced by banks,” Cassidy said.

But this is not the case with trackers which go up and down when the ECB rate moves.

He said the rise in the average Irish mortgage rate could reflect large numbers of homeowners locking themselves into more expensive longer-term fixed rates ahead of an ECB decision.

“Rapidly rising house prices have likely pushed more first-time buyers into a higher loan-to-value range as well.”

The average mortgage for a first time buyer in Ireland is around €270,000.

This means that someone who borrows this amount over 30 years pays around €176 more per month, or more than €2,100 per year, compared to our European neighbours.

Banks there are defending higher mortgage rates on the grounds that mortgages in Ireland are considered risky, in part because banks struggle to enforce collateral if a loan is overdue.

This means Irish banks need to hold around three times the level of capital to hedge against potential loan losses compared to banks in the rest of Europe.

The time to recheck your risk profile matches your tolerance for market downside Mon, 09 May 2022 19:00:00 +0000

Investors may not have fully appreciated the level of risk they were carrying in their investment portfolio. Equity allocations have been rising for years as capital market forecasts dictated higher allocations to risky assets in hopes of hitting real return targets.

Psychologist Amos Tversky and Nobel laureate Daniel Kahneman found that investors feel twice as much pain from a loss as joy from an equivalent gain.

Assess comfort levels

This is called “loss aversion,” and it means investors hate losing money far more than they enjoy making it. Feeling uncomfortable with negative returns is normal human behavior, but doing nothing is not a viable investment strategy.

Investors can take this opportunity to gauge their comfort level with recent losses and whether their risk profile matches their tolerance for market downturns. As Mike Tyson said, “Everyone has a plan until it’s punched in the mouth.”

In an attempt to educate investors on investment risks, the Australian Prudential Regulation Authority (APRA) has introduced seven standard risk measures for pension products to provide a common basis for comparing strategies.

The measure is based on the number of years of negative annual returns a strategy can expect over a 20-year period. A typical balanced strategy should have five negative returns in 20 years, while an equity portfolio should average six negative annual returns over a 20-year period. This would undoubtedly surprise many new investors.

Many commentators now draw parallels with the period 2001-2002 after the “technological sinking”. No income and high multiple businesses were sanctioned. Flows out of equity markets have been strong over the past year, sentiment indicators are at reasonably bearish levels, and key technical support levels look well below the current market level.

In this environment, it is difficult to judge when the markets are rebounding and whether we have reached a turning point or just another violent bear market rally.

The fundamental question imposed on the markets is what level of interest rates will be needed to bring inflation levels back within the central bank’s target ranges.

Many experts argue that spot rates will need to go well beyond neutral to dampen demand in commodity and service markets. The pace of quantitative tightening through central bank balance sheet reduction makes this cycle much more difficult to assess.

The risk of political error is high. But central banks are not looking to create recessions. Although the market spends its time trading all the nuances, central banks have the big picture of the path of interest rates – in the US this is indicated by the dot plots. But every policy meeting will still be live and heavily dependent on data.

It will be important to understand the reaction function of central banks as they weigh the risk-reward ratio of an action against the consequences of a type one or type two error.

Central banks will be walking a tightrope in hopes of achieving a soft economic landing with a benign inflation outcome. And private investors are hoping they can engineer the Goldilocks outcome to avoid one of those dreaded years of negative returns.

China advances in beef export grading Sat, 07 May 2022 19:09:49 +0000

Basic beef export numbers appear weak, but not too different from recent trends. The low cattle slaughter rate in April 2022 saw its lowest exports since 1996. Figure 1 shows that the decline in total exports was largely in line with the seasonal trend.

Total beef exports were down 17% in March and 15% in March 2021. After last month, when we looked at export consolidation in the biggest markets, this month they took the biggest hit. falls. Beef exports to Japan fell 25% from a year ago, South Korea by 26% and the United States by 17%.

Exports to China fell from last month, but rose 8% from a year ago. Exports to China were still in second place, and only 15% less than Japan, which retained first place. It was, however, very strong compared to last year’s average of 37%.

Beef export values ​​tell a lot, but we only have them through February. Figure 2 shows the value of beef exported to China, the United States and Japan divided by volume. This gives a price per kilogram. Interestingly, Japan lags behind the other two major markets, but that could have something to do with the number of bone-in cuts.

The price of beef exported to China has kept pace with the US and has slowly contributed to US market share.

In its latest update, Steiner reported that some shipments to China were diverted in April due to issues downloading ships and transporting beef due to Covid lockdowns. This can be seen somewhat in the data, with Taiwan receiving 915 tonnes more beef in April than in March and 61% more than on April 21 (Figure 3). It was the biggest export month to Taiwan since 2019, and shows that demand is still quite good in smaller markets. When they can get it.

Beijing teeters on the brink of Covid lockdown Mon, 02 May 2022 07:22:41 +0000

The coronavirus pandemic is creeping closer to the halls of power in Beijing as authorities race to avert an uncontrolled Shanghai-style outbreak of Omicron in the Chinese capital.

Beijing is tightening coronavirus restrictions after reporting 41 cases on Sunday. Officials in the city of 22 million, which is also home to top leaders of China’s ruling Communist Party, are imposing more restrictions, including closing gyms and cinemas and increasing Covid-19 testing requirements, as they try to avoid joining tens of millions of people confined to their Shanghai apartments.

The new wave of social and health checks in Beijing marked the latest sign that Chinese leaders remained committed to the brutal implementation of President Xi Jinping’s zero Covid policy. This is despite indications that the policy is causing widespread economic damage within and beyond China’s borders while stirring up domestic opposition to the government’s handling of the pandemic.

Beijing authorities ordered three rounds of PCR tests across the city last week after a cluster of cases was discovered in the Chaoyang business district. The daily number of cases in the capital has remained in double digits for the past seven days.

Residents returning to schools and offices on Thursday after this week’s three-day public holiday will be required to show a negative Covid test taken within 48 hours. Indoor dining has been banned during the holidays in a bid to slow the outbreak.

The ramping up of controls in Beijing follows small-scale protests that erupted in Shanghai amid food shortages, as well as online complaints about Xi’s policies.

After weeks of lockdown in some regions hit hard during the first wave of Omicron, including Shanghai, Jilin and Zhejiang, the number of official cases is falling.

But even as life in cities shows nascent signs of revival, the vital logistics routes that connect buyers and suppliers remain strangled. Chinese authorities have also limited traffic between cities to prevent the importation of infections, leaving factories without crucial components needed for manufacturing.

Official economic data released on Saturday showed manufacturing and services activity was at its lowest level since the pandemic erupted from central China’s Wuhan in early 2020.

China’s non-manufacturing purchasing managers’ index, comprising the services and construction sectors, fell to 41.9 in April, deteriorating from 48.4 the previous month and well below the 50 threshold. points which indicates an expansion rather than a contraction.

The manufacturing PMI, a crucial indicator of factory activity in the world’s most important engine of growth, fell to 47.4 from 49.5 in March, according to data from the National Bureau of Statistics.

The data highlighted how weak consumer sentiment and immense supply disruptions were hitting the world’s second-largest economy.

Mounting pressures are already eroding confidence in Beijing’s ambitions to hit 5.5% growth this year – its lowest target in 30 years – while forcing China into a series of stimulus measures and weakening the renminbi.

Economists have warned that the economic shock from the latest lockdowns could be worse than the fallout from the outbreak in Wuhan two years ago. Indeed, many high-tech and automakers are located in and around Shanghai, which faced restrictions for several weeks during a usually busy time for factories in the country.

Wang Zhe, senior economist at Caixin Insight Group, also noted growing distress in China’s labor market and inflation, compounding problems for economic planners in Beijing.

“Some companies said demand was weak due to the Covid outbreaks, and some said the main issue was difficulty getting workers back to work,” Wang said. “Employment has fallen in eight of the past nine months, including April.”

Additional reporting by Andy Lin in Hong Kong

Why is the Federal Reserve raising rates by quarter percent? Fri, 29 Apr 2022 23:33:19 +0000

This is just one of the stories in our “I’ve Always Wondered” series, where we tackle all your business questions, big or small. Have you ever wondered if recycling is it’s worth it? Or how store brands pile up against brand names? Discover more of the series here.

Listener Chris S. asks:

Is the Federal Reserve required to change interest rates in 1/4 point increments? Why not tenths?

The Federal Reserve raised interest rates by 0.25% last month and plans to raise its key rate six more times this year, including at its meeting next week.

The Fed can go years without changing rates, but when it does, it always increases or decreases in multiples of 25 basis points. The central bank’s decision to adjust rates by multiples of a quarter of a percentage began more than 30 years ago, late 1989under the leadership of Fed Chairman Alan Greenspan.

“The Fed didn’t really start explicitly targeting the federal funds rate until the late 1980s,” Daniel L. Thornton, an economist and former adviser at the Federal Reserve Bank of St. Louis, told Marketplace. The Federal Reserve then began publicly announcing these targets In 1994.

“I think it’s just one of those things that they felt comfortable with,” Thornton said.

According to Gary Richardson, professor of economics at the University of California at Irvine and former Fed historian, while there is a lot of science that goes into economics, sometimes there are rules of thumb that economists s stick to it.

The Fed was not looking for the optimal percentage, he explained. “They started doing a quarter point, and it worked well because it was clear and it was infrequent and progressive,” Richardson said.

Other countries outside of the United States also change their quarterly percentage rates, such as Norway and Indonesia. However, others have changed them by a few tenths of a percent, such as China.

“If you’re going to do smaller increments, then you need to make more frequent decisions,” Richardson said. “The FOMC might think its current schedule of eight meetings a year is the right frequency.”

More frequent meetings could be a problem for staff, Richardson noted. The Fed has blackout periods a few weeks before its FOMC meetings during which employees cannot engage in certain financial transactions.

“If you increase the frequency of meetings, when are these people going to buy houses?” said Richardson.

The Fed has adjusted rates by 50, 75 and 100 basis points over the past three decades, but there are some periods when it has stuck to the traditional 25.

Between 2004 and 2006, the Fed raised rates by 25 basis points for 17 consecutive meetings. Economists said the Fed wants fight against creeping inflation rates, although it wasn’t too big a problem. Between 2015 and 2018, the Fed raised the rate nine times by the same increment.

Thornton said if the Fed felt the need to adjust rates, but didn’t feel the need to act quickly, it would stick with the quarter-percentage change. If he raises those rates, getting too aggressive could scare the market.

At its next meeting, the Federal Reserve is expected to raise rates half a percentage for the first time since May 2000. A signal that the Fed thinks the economy is overheating, Richardson said.

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Scott Morrison, Anthony Albanese continue their campaigns; Union leader returns from COVID isolation; Australian defense of Liberal inflation rates attacked by Labour; Pauline Hanson, Labor-preference One Nation; The Greens’ climate policy outlined by Adam Bandt Thu, 28 Apr 2022 23:26:18 +0000

Warringah’s controversial Liberal candidate Katherine Deves says she’s not transphobic and just wants to have a ‘respectful debate’ about women’s sport.

“This argument is about women and girls,” Deves, who apologized for old tweets falsely claiming “half of all men with a trans identity are sex offenders,” said on 2GB radio Friday. morning.

Katherine Deves arrives at Club RSL in Forestville on Friday.Credit:James Brickwood

“Women and girls should have the right to have a dedicated women’s sport class for player safety and fair competition.”

When asked if she was transphobic, she replied, “Of course not…it’s not about that.”

“In the early ’90s, I was going to Mardi Gras…I voted for same-sex marriage,” Deves said.


“I have no problem with that. But this is a collision of rights.

Treasurer Josh Frydenberg refused to back Deves’ continued candidacy when asked this morning whether the Liberal Party should dump her, while condemning her “inappropriate” references to the Holocaust.

“This language is inappropriate,” Frydenberg, who was born in Australia to Jewish parents, told ABC radio this morning.

He said that while there was a legitimate debate to be had about fairness in women’s sport, “when you start bringing in those analogies, or that level of terminology, I think both diminish the person who is arguing that it also distracts from the real issues at stake.”

Deves reportedly agreed to visit the Jewish Museum in Sydney after new tweets were discovered, in which she referred to Jewish schoolgirl Anne Frank, who died in a Nazi concentration camp in 1945.

Treasurer Josh Frydenberg.

Treasurer Josh Frydenberg.Credit:Justin McManus

When asked why the Liberal party was running a candidate who was “now exploiting the death of Anne Frank,” Frydenberg said the use of Holocaust analogies was “largely inappropriate…in the political context current contemporary”.

Deves’ references to Nazism were “insensitive, and they are unacceptable,” the treasurer said.

In Friday’s radio interview, Deves said her concern about transgender participation in women’s sport was about “equality and fairness.”

“Women and girls shouldn’t have to face a discrimination court when they just want to have an all-female team… All I’ve ever wanted is for this debate to happen in the public domain.”

Asked if she agreed that existing laws already protected sportswomen who formed women-only clubs, Deves replied: “There is legislation in place, but it’s not working the way it should. “

She said her previous controversial Twitter comments were made “as a private person not considering that I would end up raising my hand to run for politics”.

Deves said she wanted to “move on” from the social media controversy and that “Twitter is not a place where you should be pursuing tough arguments.”

“I apologized and I think we just need to conduct these debates going forward in a respectful and dignified manner,” she said.

Zimbabwe’s president warns currency manipulators Mon, 25 Apr 2022 04:30:06 +0000

Emmerson Mnangagwa, President of Zimbabwe, said banks and companies that engage in local currency manipulation and unjustifiable price increases could risk losing their operating licenses, Bloomberg reported Sunday (April 24th).

The government says it has found the entities responsible. Now the administration is looking for ways to deal with those responsible.

“These economic actors are not acting alone, they are being sent by foreign countries hostile to Zimbabwe to weaken our local currency,” Mnangagwa said, speaking at a rally of supporters, Bloomberg wrote.

The president also spoke of difficulties with prices and exchange rates – according to Bloomberg, the local currency officially trades at 155.14 Zimbabwean dollars to the US dollar, but often changes hands on the street for 350 Zimbabwean dollars.

The report said the Zimbabwean dollar fell 24% in the first quarter. However, on the black market, it depreciated by around 20%.

“We have a challenge in our economy, especially around prices and exchange rates,” the president said. “We are working on a solution, we are now getting closer to the companies that are behind what we have been witnessing lately.”

See also: Zimbabwe’s AgriTech start-up Cholsas aims to connect farmers, markets and suppliers

PYMNTS wrote that Cholsas, an agricultural B2B e-commerce marketplace in Zimbabwe, intends to bridge the gap between agricultural industry sectors.

Farming features in every tax bracket in the country, with people doing it as a secondary activity and some doing it as their main form of income. And there are also the big commercial operations.

Cholsas, according to the report, tries to let agricultural merchants and service providers market and supply goods to farmers.

Farmers can also sell large quantities of crops in different markets using the same platform. The main objective of the company was to offer a way for agriculture to be less fragmented, so that a beginner could have more of a basis to source products from and not find an unsuitable supplier.



Plastiq - The Future Of Business Payables Innovation: How New B2B Payment Options Can Transform The SMB Back Office - April 2022 - Find out how all-in-one payment solutions can help businesses streamline B2B transactions and eliminate transaction friction. AP and AR management

On: While more than half of SMBs believe an all-in-one payment platform can save them time and improve cash flow visibility, 56% believe the solution could be difficult to integrate with AP systems and existing ARs. The Future Of Business Payables innovation report, a collaboration between PYMNTS and Plastiq, surveyed 500 SMBs with revenues between $500,000 and $100 million to explore how all-in-one solutions can exceed customer expectations. SMEs and help sustain their activities.

Forget the Fed, pay off your credit cards | News, Sports, Jobs Sat, 23 Apr 2022 05:06:30 +0000

By Sara Rathner


The cost of everything keeps rising. And if you happen to have credit card debt, that’s also likely to get a bit more expensive, thanks to a series of interest rate hikes starting this month.

With inflation at its highest rate since the early 1980s, the Federal Reserve is adjusting interest rates to hopefully stabilize the US economy. In short, the Fed changes the federal funds rate, which changes the prime rate – this is the rate banks charge customers with high credit ratings. Credit card issuers add to the prime rate to set their interest rates. So when the prime rate goes up, so does what you’ll pay when you’re in debt.

Do you have all that? Awesome. Now forget what you just read and pay attention to this part: if you have significant credit card debt, it doesn’t matter what the Fed does. Your credit card debt has always been and will continue to be expensive.


If you have a balance on your credit card of $5,000 month over month and your interest rate is 16%, you will spend $800 in interest over the course of a year. If your interest rate increases to 16.25%, that translates to just $13 more in interest over a year.

Technically, this means it’s not so much a rate hike as a slight upward slope. But $800 was already a lot, and that’s without considering the fact that you’ll still have to spend extra money that you might not be able to pay back. Bills don’t stop just because you’re in debt.

That’s why squeezing a stress ball while watching the news isn’t helpful in this case. What helps is to face money problems head on.

“The hardest part is tearing off the bandage and adding up the numbers to see how much you owe,” says Akeiva Ellis, certified financial planner and founder of The Bemused, a financial literacy brand for young adults. “But if you’re able to get to that point, it’s really about making a plan. Don’t let your debt overwhelm you. The sooner you can face the numbers and devise a plan to pay it back, the easier you’ll breathe.


¯ SEARCH FOR BETTER DEALS: The average FICO score in the United States rose to 716 in August 2021, and this increase was more frequent for those with lower credit scores. (FICO scores of 690 or higher are considered good credit.) “It may happen that when you applied for the account you have, your credit score was lower”, says Bruce McClary, senior vice president of communications at the National Foundation for Credit Counseling. He recommends checking your credit report and score to see if you’ve moved to a higher score range. If so, you may be able to negotiate a better interest rate on your credit card.

¯ CONSOLIDATE YOUR DEBTS: This higher credit score could also qualify you for a balance transfer credit card with an interest-free promotional period or a low-interest personal loan. These can both give you a high interest reprieve, but note that this depends on what terms you qualify for. And in the case of balance transfer cards, the interest rate will go up as soon as the 0% period ends.

¯ REVISE YOUR BUDGET: The more money you can apply for your monthly credit card payment, the faster you can get out of debt. But that’s easier said than done in a time of rising prices. “Rising interest rates do not live in a vacuum,” said McClary. “Other things keep happening that increase the financial pressures on every American.” If you’re not sure where to start, McClary recommends getting help from a financial advisor or nonprofit credit counseling agency. “Anything people can do to be proactive, they’ll thank themselves later.”

¯ USE A DEBT PAYMENT METHOD: This can help you stay organized and motivated, especially if you have multiple debts at the same time. Ellis suggests the debt avalanche repayment method, where you list your debts from highest to lowest interest rate, make minimum payments on each, and apply any extra money in your budget to the highest debt. raised first. Once you’ve paid that, focus on the next debt on the list, and so on. “For most people, credit card debt is the most expensive debt,” said Ellis. “So that’s something that I usually encourage people to focus on first.”

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