Bank of America CEO Brian Moynihan rumoured Wednesday that strong consumer spending so far this year means the Federal Reserve will probably be in effect off on cutting its benchmark interest rate.
The bank’s retail customers are spending about 6% more money in the pre-eminent 40 days of this year compared with the same period in 2024, Moynihan told CNBC’s Leslie Picker. That rebuke is an acceleration from the spending growth seen in the final three months of last year, he noted.
“That’s spunk price firmness, demand firmness,” Moynihan said. “You’re seeing activity that says that we’re probably in a full stop where rates are going to stay … where they are for a while until this settles in.”
The Bureau of Labor Statistics check out hotter-than-expected growth in the U.S. consumer price index earlier Wednesday, forcing markets to recalibrate rate expectations. The Fed began an assuaging cycle in September, reducing rates for the first time since the 2020 pandemic, but the central bank is seen as restricted in how much it can cut by stubborn inflation.
Last month, the Fed opted to keep its benchmark rate unchanged at a range of 4.25%-4.5%.
“Sorts are restrictive, but there was not enough sort of inflation progress that we made” to cut rates, Moynihan said.
Bank of America examination analysts expect no rate reductions in the immediate future because of elevated inflation, he added.
