Financial institution of America CEO Brian Moynihan mentioned Wednesday that robust client spending up to now this yr means the Federal Reserve will in all probability maintain off on chopping its benchmark rate of interest.
The financial institution’s retail clients are spending about 6% extra money within the first 40 days of this yr in contrast with the identical interval in 2024, Moynihan instructed CNBC’s Leslie Picker. That charge is an acceleration from the spending development seen within the closing three months of final yr, he famous.
“That is driving worth firmness, demand firmness,” Moynihan mentioned. “You are seeing exercise that claims that we’re in all probability in a interval the place charges are going to remain … the place they’re for some time till this settles in.”
The Bureau of Labor Statistics reported hotter-than-expected development within the U.S. client worth index earlier Wednesday, forcing markets to recalibrate charge expectations. The Fed started an easing cycle in September, chopping charges for the primary time because the 2020 pandemic, however the central financial institution is seen as restricted in how a lot it may well minimize by cussed inflation.
“Charges are restrictive, however there was not sufficient kind of inflation progress that we made,” to chop charges, Moynihan mentioned.
Financial institution of America analysis analysts anticipate no charge cuts within the rapid future due to elevated inflation, he added.