Finance
Jean Chatzky on the growing interest in personal finance education
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Finance
In Saudi Arabia, China pushes for a new global financial consensus
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China’s central bank governor has offered to deepen cooperation with emerging economies on a series of issues and to help them gain a greater voice in global financial governance during a series of speeches in Saudi Arabia.
Pan Gongsheng, governor of the People’s Bank of China, pledged to work with the Gulf states to promote currency stability, expand bilateral financial investment, and create integrated payment systems during a meeting with central bank governors from the region.
China would also work with Gulf Cooperation Council (GCC) members on digital currency and anti-money-laundering efforts, Pan added, according to a news release issued by the PBOC on Tuesday.
China has long sought to internationalise its currency, reduce its reliance on the US dollar, and enhance its financial autonomy to facilitate global trade and investment. This effort is also central to President Xi Jinping’s vision of turning China into a financial powerhouse.
On the same day, speaking at a conference organised by the International Monetary Fund and the Saudi Finance Ministry, Pan urged emerging markets to increase their exchange rate flexibility and strengthen cooperation to safeguard financial stability during a period of heightened currency volatility.
“Emerging markets face mounting challenges such as geopolitical risks, economic fragmentation, rising trade protectionism, slowing medium-term growth, financial market volatility, cross-border capital flow pressures, and rising global debt risks,” Pan said in Alula, Saudi Arabia.
Finance
Homebuilder confidence falls to lowest level in five months amid tariff concerns, high mortgage rates
Homebuilders are feeling less optimistic about the housing market as they navigate concerns over tariffs, elevated mortgage rates, and high housing costs.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index was 42 in February, a five-point drop from January and the lowest level in five months. Economists were expecting a reading of 46, per Bloomberg data.
A reading under 50 indicates that more builders view conditions as poor than good.
“While builders hold out hope for pro-development policies, particularly for regulatory reform, policy uncertainty, and cost factors created a reset for 2025 expectations in the most recent HMI,” NAHB Chairman Carl Harris, a custom home builder from Wichita, Kansas, wrote in a statement.
One of the major cost concerns stems from President Trump’s executive order imposing 25% tariffs on all imported steel and aluminum products, set to take effect in March. According to the National Association of Home Builders, this could raise residential construction costs.
This tariff move comes after Trump announced a month pause on other tariffs for Canadian and Mexican goods.
“With 32% of appliances and 30% of softwood lumber coming from international trade, uncertainty over the scale and scope of tariffs has builders further concerned about costs,” NAHB chief economist Robert Dietz wrote in a statement.
At the same time, builders continue to grapple with elevated mortgage rates. Data from Freddie Mac shows that the 30-year fixed mortgage rate is hovering around 7%, further dampening demand.
The NAHB survey found 26% of builders cut home prices in February, down from 30% in January and the lowest share since May 2024. Meanwhile, 59% of builders used sales incentives in February, a slight decrease from 61% in January.
NAHB’s chief economist Robert Dietz said he expects “incentive use may also be weakening as a sales strategy as elevated interest rates reduce the pool of eligible home buyers.”
Indeed, in the survey, the gauge measuring sales outlook over the next six months plunged 13 points to 46 and hit its lowest level since December 2023. The prospective buyer traffic gauge posted a three point decline to 29. The NAHB index of current sales conditions dropped four points to 46.
Dani Romero is a reporter for Yahoo Finance. Follow her on X @daniromerotv.
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Finance
Dark side of RBA interest rate cut millions are waiting for: ‘Disaster’
A top economist has warned Australian mortgage holders they could face interest rate hikes later this year should the Reserve Bank of Australia (RBA) cut interest rates today. The central bank is expected to cut the cash rate from its high of 4.35 per cent, marking the first time rates have been lowered in more than four years.
Judo Bank chief economic advisor Warren Hogan told Yahoo Finance it was still too early for the RBA to cut interest rates and the board risked driving up inflation before it was under control. Headline inflation eased to 2.4 per cent annually in December, while underlying inflation slowed to 3.2 per cent annually. This was its lowest in three years.
“It might sound attractive to a lot of Australians with mortgages to get a rate cut or two and save $50 a month in the short-term over the next six months, maybe even 12 months,” Hogan said.
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“But if that puts at risk rates going up by a percentage point or two, and then having to come up with actually not just that $50 back, but then another $100 or $150, do they really want that $50 right now and then putting at risk that it’s going to go up later?”
Hogan said the economy was recovering, with private sector demand starting to accelerate, strong employment, a jump in job vacancies, low unemployment and strong consumer spending.
“If you cut just as the economy is picking up and before inflation comes down, you risk not only stopping inflation coming down, but inflation going back up again, and then having to raise rates and not just a few times, a lot,” he said.
“That’s the disaster situation that we really must avoid, is rates going up a lot from here.”
Do you have an interest rates story to share? Contact tamika.seeto@yahooinc.com
Hogan said this “disaster situation” could play out very quickly and the RBA could be forced to hike the cash rate to 5 per cent through 2026.
“What worries me is that a rate cut now lays the foundation for what we know all through history of the disaster, which is that inflation starts to rise again and they’ve got to really jack rates up until it really hurts,” he said.
“Of course, that’s when people who are vulnerable get hurt.”
Hogan said the RBA also risked damaging their credibility if they ended up needing to hike interest rates again to bring down inflation.
“It’s very important for central banks that people believe them when they say they’re going to get inflation down and keep it there,” Hogan said.
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