Bank of America CEO Discusses Economic Slowdown and Fed Cutting Interest Rates
Bank of America CEO Brian Moynihan expects the U.S. economy to slow down in the middle of next year. The executive also noted that according to his bank’s research, the Federal Reserve will start cutting interest rates in the middle of next year to the latter half of next year.
Bank of America Boss Brian Moynihan on U.S. Economy
The chairman and CEO of Bank of America, Brian Moynihan, shared insights on the U.S. economy and the potential Federal Reserve interest rate cuts during an interview with Fox Business on Wednesday. Moynihan detailed that according to Bank of America’s research team:
The economy slows down in the middle of ’24 to about a half-a-percent annualized growth for the second and third quarter, and then works its way back out. And the Fed will start cutting rates, they believe, in the middle of next year to the latter half of next year.
“So that’s the basic thing, what would be called a soft landing,” he added. The Bank of America chief then cautioned that there is a geopolitical risk, such as if the Fed tightening goes too far.
Moynihan discussed how interest rate hikes have changed consumer and business decision-making. The Federal Reserve has raised its key interest rate 11 times since March of last year, pushing it to the highest level in 22 years. Furthermore, the executive stressed that inflation remains a concern, with the Labor Department’s recent report indicating a 0.4% rise in the consumer price index for everyday goods, including essentials like gasoline, groceries, and rents, during September.
The Bank of America CEO emphasized: “The higher interest rates affect the most rate-sensitive of activities, so homes, and you saw mortgage applications were low today just because a higher interest rate makes everybody step back and adjust. Car purchases, same thing.” Tesla CEO Elon Musk recently raised a similar concern regarding high interest rates affecting car purchases.
Moynihan noted: “People are forgetting on the commercial side, there’s a huge impact of higher rates in terms of people’s willingness to borrow … And so lending conditions are tight, and that’s what the Fed wanted to achieve.” He concluded:
The point is that all the impacts of everything going on have led the consumer to slow down their activity. Whether it’ll be bounced around in retail sales, this is across all the things they do with their money.