Bank of America CEO Brian Moynihan said Wednesday that robust consumer spending so far this year suggests the Federal Reserve will likely delay cutting its benchmark interest rate.
According to Moynihan, the bank’s retail customers have spent approximately 6% more in the first 40 days of this year compared to the same period in 2024. He noted that this marks an acceleration from the spending growth observed in the final quarter of last year.
“That’s driving price firmness, demand firmness,” Moynihan said. “You’re seeing activity that says that we’re probably in a period where rates are going to stay … where they are for a while until this settles in.”
Earlier Wednesday, the Bureau of Labor Statistics reported stronger-than-expected growth in the U.S. consumer price index, prompting markets to reassess their rate expectations.
Bank Of America CEO Brian MoynihanThe Fed began its easing cycle in September, implementing its first rate reduction since the 2020 pandemic. However, persistent inflation is expected to limit the extent of future cuts.
In its most recent decision last month, the Fed kept its benchmark rate steady within the 4.25%-4.5% range.
“Rates are restrictive, but there was not enough sort of inflation progress that we made” to warrant a cut, Moynihan said.
He added that Bank of America’s research analysts anticipate no immediate rate reductions due to ongoing inflationary pressures
