Warsh's Rate Hike Boosts Visa and Wells Fargo Prospects

The Federal Reserve raised interest rates by a quarter point to between 3.75% and 4%, marking the first hike in three years, as expected by markets. The future remains uncertain with at least one more rate increase anticipated this year.

Visa, the largest payments network globally, is seen as resilient in an elevated-rate environment due to its fee-based business model. When economic activity is strong, it generates more revenue through increased transaction volume and fees. In its Q3 2026, Visa's payments volume rose 10% year-over-year.

Wells Fargo may also benefit from rising interest rates, despite the flattening yield curve, as net interest income has largely increased over the past year. The bank's credit situation remains benign with nonperforming assets trending downward. However, deposit costs are expected to continue rising.