Bank of America CEO Brian Moynihan has urged the Federal Reserve to be cautious with interest rate cuts. Moynihan noted that the Fed was slow to raise rates in 2022 and should now be careful not to reduce them too aggressively. He expressed concerns that acting too quickly or slowly carries more risk now than earlier in the year.
Moynihan’s comments follow the Fed's initial rate cut since 2020, with many investors lowering expectations for rapid rate decreases. Despite signs of economic resilience, the CEO projected that the Fed could cut rates by a total of 150 basis points over the next two years, eventually bringing the rate to 3.25%. He expects inflation would drift down to 2.3% into 2025 and 2026 under such a scenario.
Moynihan, who has led Bank of America since 2010, emphasized that current economic conditions make it challenging to foresee a recession. He mentioned that U.S. consumers still have substantial savings but are starting to become more budget-conscious. His comments also highlighted that higher rates for a longer period would benefit lenders, allowing them to increase the spread on loans. He also shared that Bank of America’s net interest margin is expected to rise to 2.3% over the long term, contrasting with most banks, which are flat or declining.