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Fed anticipates slow rate increase of 0.25%, remaining steadfast against inflation – Industry roundup: 1 February

Fed anticipates slow rate increase of 0.25%, remaining steadfast against inflation

The US Federal Reserve (Fed) is forecasted to increase interest rates by a quarter point today, raising the target up to 4.75%. This would be the eighth rate hike since March 2022. However, the Fed has also signalled that it would maintain caution in the fight against inflation as it scales back the size of the increases.

The Fed will reportedly announce its most recent rate decision at 2pm EST today and then address the public at 2:30pm EST. The anticipated quarter-point increase would be the lowest jump in the federal funds target rate range since the cycle's first hike in March 2022. The Fed funds target rate range would be 4.50% to 4.75%, reportedly a half-point difference from the Fed's estimated end point, or terminal rate range of 5% to 5.25%. Reports indicate that the Fed must maintain balance between inflation and recession while also evaluating the effects of its high interest rate ramp from 2022.

“What the Fed says, rather than what it does”, may be the deciding factor, stated Steve Clayton, Head of Equity Funds, Hargreaves Lansdown. Since US inflation has been declining for some time, many analysts predict that this will be the final spike, followed by a pause until the Fed starts lowering interest rates later this year, added Clayton. Furthermore, markets will likely respond favourably to any indication that this is the final boost, while forecasts of additional hikes to levels beyond 5% are unlikely to be well received by investors, said reports.

The US interest rate hikes are reportedly consistent with the majority of the world. The European Central Bank (ECB) is reportedly considering raising interest rates by 50 basis points, expected this Thursday. In the United Kingdom, the Bank of England intends to raise interest rates to 4%, potentially becoming the tenth consecutive increase in the base rate. The Bank of Canada has reportedly raised rates 25 basis points higher but is expected to maintain the policy rate at its present level while evaluating the effects of the cumulative interest rate hikes.

Strike extends its cross-border payments solution to the Philippines, a US $35 million remittance market

Strike, a US-based crypto platform which closed on an US $80 million round in November 2022, has introduced a new feature, dubbed Send Globally, enabling users to transmit money between currencies by using Bitcoin as an intermediary. Additionally, Strike has also announced that new functionality is expected to become available immediately in the Philippines after being introduced in December in Nigeria, Kenya and Ghana. With this solution, the company is reportedly entering the remittance payments markets, which have been known to be dominated by large payment enterprises.

Cross-border transfers have been touted as one of cryptocurrencies' best possible use cases. However, the development of a truly blockchain-powered remittance network has been hampered by cumbersome user interfaces and exorbitant fees.

Strike reportedly leverages the use of a Lightning Network, a Layer-2 technology developed over Bitcoin, enabling users to transmit cryptocurrency in an efficient and cost-effective manner. The company’s API capabilities reportedly enable other businesses to use its Lightning functionality, combined with a wallet that enables users to transact with one another. Strike uses a partner company to convert the US dollar to Bitcoin before converting it to the local currency, which can reportedly be deposited in the recipient’s bank account with more favourable rates than conventional banks.

Reports indicate that the Philippines has one of the largest remittance marketplaces in the world, worth approximately $35 billion, with over a third originating from the US. With this growth potential, Strike has reportedly partnered with the cryptocurrency firm in order to facilitate currency exchanges between Philippine pesos and US dollars.

Marqeta purchases fintech Power Finance for US $275 million in cash, marking its first M&A venture

Marqeta, a global platform for card issuance, has purchased Power Finance, a platform for managing credit cards, for US $275 million in cash, aiming to enhance its credit and card issuing capabilities. The acquisition is anticipated to be completed in the first quarter of 2023.

Marqeta, which reportedly became public in 2021 and is valued at $3.7 billion, says that it offers a single, universal, cloud-based, open API platform for modern card issuing and transaction processing, enabling both traditional businesses and fintechs to offer cards, wallets and other payment methods. Companies such as Block, Uber, Google, Affirm, DoorDash, JP Morgan, Citi, Goldman Sachs, Instacart and Ramp are among its clients.

The initial product from Power Finance is a credit card issuing program that reportedly enables businesses, brands and banks to embed fintech services, such as tailored credit card programs, promotions and rewards, into current mobile and web applications. Simon Khalaf, CEO, Marqeta, commented that Power Finance’s top-tier, cloud-native credit card issuance technology solution would significantly improve Marqeta's platform for managing credit card programs. Furthermore, Marqeta claims that the acquisition will help expand the firm's capacity for credit products by enabling it to provide customers with the ability to develop and introduce a variety of credit solutions.

Fiserv acquires payments license from MAS, aiming to facilitate new payment flows across the APAC region

The Monetary Authority of Singapore (MAS) has granted a Major Payment Institution (MPI) license to First Data Merchant Solutions Private Limited, a Fiserv, Inc. operating entity that offers payment solutions to merchants in Singapore. The license reportedly took effect on 1 January 2023.

Based on the Payment Services Act (PS Act) 2019, the license will enable the entity to offer services for domestic and international money transfers as well as merchant acquisition.

With its regional headquarters in Singapore, Fiserv, a major provider of payments and financial services technology solutions, has reportedly served some of the largest banks, fintechs and merchants in Singapore and the Asia Pacific region for more than twenty years. Additionally, Fiserv offers complete payment acceptance solutions for major enterprises as well as small businesses in Singapore, enabling integrated payment acceptance across physical and digital channels in a variety of payment options both locally and globally. The MPI license will reportedly enable Fiserv to provide additional payment methods for its clients in Singapore, such as cross-border funds transfer services and real-time account transfers, as well as merchant acquiring services.

Fiserv states that its comprehensive Global Risk and Controls Framework and Global Cybersecurity Services, which include anti-money laundering and counter-terrorist financing controls in addition to cybersecurity standards to safeguard customer data, will ensure compliance with Singapore's PS Act standards as well as those set forth by regulatory bodies in other countries where the company conducts business.

Brazil's first Bitcoin and crypto card launches via Binance and Mastercard collaboration

The demand of cryptocurrency is reportedly increasing in South America. Payment behemoth Mastercard and Binance, a cryptocurrency exchange, have partnered to introduce a prepaid crypto card, dubbed the Binance Card, in Brazil, which will reportedly support over a dozen other currencies including the Brazilian real, Bitcoin, and Binance’s native coin, BNB.

The Binance Card, which will reportedly be issued by Dock, is expected to enable users in Brazil to utilize cryptocurrency to pay for both purchases and bills. Over ninety million Mastercard merchants worldwide, including traditional brick-and-mortar stores and online retailers, will reportedly accept the new card.

The Binance Card is reportedly designed to convert cryptocurrency into fiat money in real time at checkout. As a result, merchants will no longer have to wait for the sale to be completed on the blockchain, stated reports.

Forecast studies reveal that Brazilians invested more than US $4 billion in cryptocurrencies in 2021, which is reportedly more than triple their investments in the US stock market. Brazil's legal framework offers governmental monitoring of the cryptocurrency market, along with licensing requirements for companies that offer services related to digital assets and stipulations for penalties that consist of prison for fraud.

TrueLayer's Signup+ streamlines customer onboarding via APIs

TrueLayer, a European-based open banking platform, has introduced an automated onboarding product that leverages open banking APIs. The new service, called Signup+, reportedly streamlines the signup procedure by combining the creation of an account and payments utilizing open banking technology. Additionally, it aims to accelerate the KYC-compliant onboarding process by quickly verifying a customer's identity, address and date of birth using bank-sourced data.

Funds are reportedly available immediately in the customer's account once deposited, enabling them to start using the services, such as wealth management or cryptocurrency trade services. Furthermore, with bank authentication reportedly embedded into every payment and real-time identification data checks, Signup+ offers a rapid and secure way to onboard new clients while simultaneously lowering the potential of payment fraud. Additionally, it assists companies in lowering operating expenses related to manual-intensive verifications.

Francesco Simoneschi, CEO and co-founder, TrueLayer, commented that ineffective signup procedures in various industries result in the loss of up to 40% of potential income. Simoneschi stated that “Signup+ represents a new generation of use cases for open banking and brings onboarding to the forefront of the conversation about where open banking is headed in the future”.

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