Bank of America CEO Brian Moynihan said Wednesday that strong consumer spending so far this year means the Federal Reserve will likely refrain from cutting benchmark interest rates.
Bank retail customers spend around 6% of their money in the first 40 days of the year compared to the same period in 2024, Moynihan told CNBC’s Leslie Picker. He noted that rate is an acceleration from spending growth seen in the last three months of last year.
“It promotes price stiffness and calls for hardness,” Moynihan said. “You see the activity we say is probably at a time when the fees stay.
The Bureau of Labor Statistics reported faster than expected growth in the U.S. consumer price index early on Wednesday, forcing the market to readjust rate expectations. The Fed began its easing cycle in September, and it was cut for the first time since the 2020 pandemic, but central banks are seen as limited in how much they can cut due to stubborn inflation.
“There are restrictions on fees, but the type of inflation progress we made was not sufficient,” Moynihan said.
Research analysts at Bank of America expect no rate cuts in the near future as inflation has risen, he added.