Bank of America CEO and Chairman Brian Moynihan discusses the Fed’s rate hikes, 2024 consumer strength and big bank regulation.
Bank of America’s CEO is warning that Americans have not yet seen the full effect of the Federal Reserve’s 11 rate hikes.
During his interview on “Mornings with Maria” Wednesday, Brian Moynihan, CEO and Chairman of Bank of America, reviewed the Fed’s monetary policies on rate hikes, urging the central bank to be careful not to “overshoot.”
“The drag on a middle market company whose, you know, line of credit went up by 500 basis points to make it simple. That’s still affecting their decisions. And so, you’re seeing them use a little less reliance. Why? A – they cost more. It makes them more conservative,” Moynihan expressed while discussing the impact of the Fed’s policies.
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He continued, discussing the impact of the hikes on the mortgage market, arguing that the demand is “very low” because rates increased and that it will take a while to adjust.
“The effects of those things are still going through the system,” the CEO said.
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“The Fed can really sit here, let it work, and potentially needs to bring the rate structure back into alignment,” he added.
The Fed closed out 2023 by leaving interest rates unchanged for the third straight time at a range of 5.25% to 5.5% and signaled a series of cuts in 2024.
Moynihan told Fox Business host Maria Bartiromo that his team is expecting four rate cuts in the new year, while Goldman Sachs economists are projecting five reductions.
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“I think, you know, there was a swing after the inflation figures, you know, six and seven cuts. It’s coming out of the market. That’s what you’re seeing a little bit. You know, one of the things that I’ve said is we’ve got to get the rate curve normalized and kind of get the debate, the daily debate about what’s that’s going to do tomorrow out of the system,” he stressed.
Moynihan argued that once the Fed is done, capital markets will reopen.
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“People say okay ‘three to 4% unemployment rate. I got my job, I got my wages.’ You know things settle in. But as long as it’s moving, that’s where we’ve got to normalize the American economy,” he said.
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Moynihan explained that the driving force behind the economy is “unleashing” entrepreneurs, consumers and businesses.
Fox Business’ Megan Henney contributed to this report
