The CEO of Bank of America, Brian Moynihan, hinted that the Biden administration and Federal Reserve had accomplished a “soft landing” following inflation issues in recent years, saying the banking behemoth no longer anticipates a recession for the US economy.
While the economy is weakening, Moynihan told CBS’s Margaret Brennan on “Face the Nation” on Sunday that consumer spending is still at pre-pandemic levels.
“Our Bank of America Research team is excellent and no longer predicts a recession,” Moynihan stated. “This time last year, a recession was forecasted.”
According to Moynihan, the rate of consumer expenditure has decreased to roughly 3% from the previous year. High interest rates are putting pressure on consumers, even if there are still encouraging indicators.
“The customer is moving more slowly. Although there is money in their accounts, it is gradually being spentt.” They work and make money, but if you notice, they’ve slowed down. The Fed must therefore exercise caution to avoid slowing down too much.
Two Fed interest rate cuts are expected this year, one at the meeting next month and one in December, according to the Bank of America. According to Moynihan, the bank also projects four rate reductions in 2025. At its July meeting, the Fed defied market expectations by choosing not to lower interest rates.
Regarding decreasing rates, Moynihan remarked, “So we’re getting back to normal, and that’s going to take a while for people to adjust.” “From a corporate, business, and consumer perspective alike.”
American markets fell sharply after last week’s poor job data and the decision not to lower interest rates; however, they have since mostly recovered. In recent weeks, mortgage rates have also dropped quickly as lenders get ready for a Fed cut.
