U.S. consumer spending seeing a ‘mitigation' in growth not a slowdown, says Bank of America CEO
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Loading... - Adrien Gauthier
- 28 Oct 2022
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U.S. consumer spending is experiencing a “mitigation of growth” but not a slowdown, Bank of America CEO Brian Moynihan said Friday.
Interest rate hikes by the Federal Reserve are starting to be felt in the housing and auto markets, and renters will see their budgets squeezed as landlords pass on higher costs, he told CNBC’s “Squawk Box Europe.” But he stressed that consumer spending remains strong.
“If you raise rates and slow down the economy to fight inflation, the expectation is you have a slowdown in consumer spending. It hasn’t happened yet. So it could happen, but it hasn’t happened yet,” Moynihan said.
“You’re seeing a mitigation of the rate of growth, not a slowdown. Not negative growth.”
Bank of America expects the Fed to hike rates by 75 basis points and 50 basis points at its two remaining meetings this year, followed by two 25 basis point increases next year. One basis point equals 0.01%.
That will take the funds rate to around 5% and the Fed can then “let it work,” Moynihan said.
The current rate of 3%-3.25% is the highest it’s been since early 2008 and follows three 75 basis point rises in a bid to combat inflation, which was running at 8.2% on an annual basis in September.
Economists, politicians and business leaders are split on whether the U.S. economy is heading for a recession or is already in one. U.S. gross domestic product grew for the first time this year in the third quarter, expanding at a higher-than-expected 2.6% annually. Read More...
