Raphael Stevens

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.

Federal Reserve Chairman Jerome Powell speaks during a meeting of the Economic Club of New York in New York City, U.S., October 19, 2023. 
Brendan Mcdermid | Reuters

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. More

Americans will soon need to apply for a travel authorization to visit 30 countries in Europe.
The application has a nonrefundable fee of 7 euros a person, or about $7.40.
Travelers must get the authorization via the European Travel Information and Authorisation System prior to their trip. It’s expected to be operational sometime in 2024.
The new system is meant as a security measure.

Vernazza, a village in Cinque Terre, Italy.
Mstudioimages | E+ | Getty Images

Americans will soon have to apply for a travel authorization to visit Europe, and failing to get one may ruin your next trip.
The requirement, slated to start in 2024, currently applies to 30 European nations, including popular destinations such as France, Germany, Greece, Italy, Portugal and Spain.

Travelers must apply for the travel authorization via the European Travel Information and Authorisation System, or ETIAS, prior to their trip.
The online application carries a nonrefundable fee of 7 euros a person, or $7.40 at prevailing exchange rates as of noon ET on Thursday. People under 18 years old or over 70 years old are exempt from payment.
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Europe is the top destination region for international travelers from the U.S., according to travel app Hopper. But Americans won’t be allowed to visit without the authorization.
“If you forget to do it, you won’t board the plane,” said Sofia Markovich, a travel advisor and founder of Sofia’s Travel.

Why Europe is requiring a travel authorization

Mstudioimages | E+ | Getty Images

The authorization isn’t a visa and doesn’t guarantee entry. Travelers with a valid visa don’t need the authorization.
In 2016, the European Commission proposed to establish the ETIAS to strengthen security checks on Americans and nationals from roughly 60 other nations who are able to visit Europe’s Schengen area without a visa.  
The new European system is similar to one the U.S. put in place in 2008.
“After 9/11, things changed in the world,” Markovich said. “It’s really about keeping things safe and knowing who comes in and who goes out.”

When travelers should apply

A couple walking around the Sagrada Familia church in Barcelona, Spain.
Jordi Salas | Moment | Getty Images

The good news: Travelers don’t have to do anything yet.
The European Union expects the ETIAS to be operational in 2024 but hasn’t set a firm rollout date. The program isn’t yet accepting applications.
“There is nothing anyone can do or needs to do now,” Sally French, a travel expert at NerdWallet, said. “But it’s something they need to keep tabs on.”
The requirement has already been delayed a few times and could be again, French said. It was initially meant to take effect in 2021 and then in 2023.

Most applications will be processed in minutes and within 96 hours at the latest, according to the EU. However, it can take up to an additional 30 days for travelers asked to provide extra information or documentation or do an interview with national authorities, the EU said.
“As soon as you make the booking, make sure you file for your ETIAS,” Markovich said.
The EU even strongly advises obtaining the travel authorization before buying tickets and booking hotels.
“Seven euros is small potatoes in the scheme or your European trip,” French said of the application fee. “You don’t want to have paid for the flights, hotels and tours, and realize you can’t take the trip because of this small step.”
The ETIAS authorization is valid for three years or until your passport expires, whichever comes first. Travelers with a valid ETIAS don’t need to apply for a new one each time they visit Europe.Don’t miss these CNBC PRO stories: More

Global fintech giant Airwallex said it has acquired MexPago, a rival payments company based out of Mexico, for an undisclosed sum.
The deal will help Airwallex, which is backed by the likes of Tencent and Li-Kashing, Hong Kong’s richest man, expand in the Americas.
Latin America is a particularly attractive spot for fintech companies, not least because of its high proportion of young people in the population.

Airwallex’s cofounders, from left to right, Xijing Dai, Lucy Liu, Jack Zhang and Max Li.

Global fintech giant Airwallex on Thursday said it has agreed to acquire MexPago, a rival payments company based out of Mexico, for an undisclosed sum to help the firm expand its Latin America footprint.
The company, which competes with the likes of PayPal, Stripe, and Block, sells cross-border payment services to mainly small and medium-sized enterprises. Airwallex makes money by pocketing a fee each time a transaction is made.

The deal, which is subject to regulatory approvals and customary closing conditions, marks a major push from Airwallex into Latin America, a market that has become more attractive for fintech firms thanks to a primarily younger population and increasing online penetration.
Jack Zhang, SumUp’s CEO, said the company was looking at Mexico as something as a hedge as it deals with geopolitical and economic uncertainty going on between the U.S. and China.
“U.S. people export to Mexico to sell to the consumer there,” Zhang told CNBC. “Because of the supply chain, you can also export out of Mexico to other countries like the United States.”
“You get both the inflow and outflow of money,” he added. “That’s really what we like the most. We can take a global company to Mexico and also help the global companies making payments to the supply chain.”
U.S.-China trade tensions have escalated in recent years, as Washington seeks to address what it sees as China’s race to the bottom on trade.

The U.S. alleges China has been deliberately devaluing its currency by buying lots of U.S. dollars, thereby making Chinese exports cheaper and U.S. exports more expensive, and worsening the U.S. trade deficit with China.
China has sought to address these concerns, agreeing to “substantially reduce” the U.S. trade deficit by committing to “significantly increases” its purchases of American goods, although it’s struggled to make good on those commitments.
“Mexico is one of the largest populations in Latin America,” Zhang added. “As the trade war intensifies in China and the US, a lot is shifting from Asia to Mexico.”
“[Mexico] is very close to the U.S. Labour is cheaper compared to the U.S. domestically. A lot of the supply chain is shipping there. There’s a lot of opportunity from e-commerce as well.”

A maturing fintech

Airwallex operates around the world in markets including the U.S., Canada, China, the U.K., Australia, and Singapore. The Australia-founded company is the second-most valuable unicorn there, after design and presentations software startup Canva, which was last valued at $40 billion.

The company, whose customers include Papaya, Zip, Shein and Navan, processes more than $50 billion in a single year. It has also partnered with the likes of American Express, Shopify and Brex, to help it expand its services internationally.
It has been a tough environment for fintech companies to operate in lately, given how interest rates have risen sharply. That has made it more costly for startup firms to raise capital from investors.
For its part, Airwallex has raised more than $900 million in venture capital to date from investors including Salesforce Ventures, Sequoia, Tencent and Lone Pine Capital. The company was last valued at $5.6 billion.

At this stage we are still expanding against our mission, which is to enable those smaller businesses to operate anywhere in the world and keep building software on top.

Jack Zhang
CEO, Airwallex

Zhang said that the company is at a stage where it has reached enough maturity to consider an initial public offering — the company says it now processes more than $50 billion in annualized transactions. However, Airwallex won’t embark on the IPO route until it gets to a certain amount of annual revenue, Zhang added.
Zhang is targeting $100 million of annual recurring revenue (ARR) for the business within the next year or two. Once Airwallex reaches this point, he says, it will then look at a public listing.
“At this stage we are still expanding against our mission, which is to enable those smaller businesses to operate anywhere in the world and keep building software on top … to protect our margins [and] grow our margins from a cost point of view, not just infrastructure,” Zhang said.
MexPago offers much of the same services as Airwallex — multi-currency accounts for small and medium-sized businesses, foreign exchange services, and payment processing — but there are a few more payment methods it has on offer which Airwallex doesn’t currently provide.

Why Latin America?

A big selling point of the MexPago deal, Zhang said, is the ability to obtain a regulatory license in Mexico without having to embark on a long process of applying with the central bank. The company has secured an Institution of Electronic Payment Funds (IFPE) license from MexPago.

That will allow Airwallex’s customers, both in Mexico and around the world, to gain access to local payment methods such as SPEI, Mexico’s interbank electronic payment system, and OXXO, a voucher-based payment method that lets shoppers order things online, get a voucher, and then fulfill their order with cash.
“The ability to access the license for the native infrastructure over there will give us a significant advantage with our global proposition,” Zhang told CNBC.
Airwallex has seen huge levels of growth in the Americas in the past year — the company reported a 460% jump in revenues there year-over-year.
Airwallex isn’t the only company seeing the potential in Latin America.
SumUp, the British payments company, has been active in Latin America since 2013, opening an office in Brazil back in 2013. The firm’s CFO Hermione McKee told CNBC in June at the Money 20/20 conference that it plans to ramp up its expansion in the region.
“We’ve had very strong success in Latin America, in particular, Chile recently,” McKee told CNBC in an interview.
“We are looking at launching new countries over the coming months.”
More than 156 million people in Latin America and the Caribbean are between the ages of 15 and 29, accounting for over a fourth of its population. These consumers tend to be more digital-native and mistrusting of established banks. More