Aug 12 2024: Bank of America CEO Brian Moynihan warned on Sunday that U.S. consumers could become discouraged if the Federal Reserve does not begin reducing interest rates soon.
In late July, the Fed held the policy rate steady at 5.25%-5.50%, where it has remained for over a year, but hinted that a rate cut might be possible as early as September if inflation continues to ease.
Moynihan commented, “The Fed has indicated that rates are unlikely to increase further, but if they don’t start lowering them soon, it could dishearten American consumers.”
He cautioned that once consumer sentiment turns sharply negative, it can be difficult to reverse.
When asked about Republican candidate Donald Trump’s recent remarks suggesting that presidents should have influence over Fed decisions, Moynihan stated that while individuals can offer advice to Federal Reserve Chair Jerome Powell, it is ultimately Powell’s responsibility to make decisions.
Moynihan added, “Central banks that operate independently and without external influence generally perform better than those that do not.”
