BofA CEO: US economy growing strongly, Fed should be cautious on rate cuts

Bank of America (BofA) CEO Brian Moynihan said US consumers continue to spend, and economic growth is expected to remain strong, urging the Federal Reserve to be patient before cutting interest rates.

In an interview with CNBC on Wednesday, Moynihan noted that spending data shows consumers are still using their money, though they are shifting toward services rather than goods.

“We’re in this classic moment ... where the consumer is saying, ‘I’m getting more pessimistic,’ in some of the surveys and things like that,” he said. “But if you actually look what they’re doing day to day, they continue to spend, which means the economy ought to be holding up better than people think.”

From a data perspective, Moynihan, who heads the second-largest US bank, expects GDP growth to be around 2% this year, down from recent trends that brought it closer to 3%.

Some of the potential slowdown, he said, stems from tariffs imposed by President Donald Trump, which he estimates could shave about 0.4 percentage points off near-term growth before the economy adjusts.

“We see the consumer continue to be solid, and that should bode well for the economy,” Moynihan said.

“There’s a lot of questions out there, and I think that will sort through. But right now, we’re not talking about what could happen, we’re talking about is happening. The consumer continues to spend pretty strongly for the first part of this year, he added.

On monetary policy, Moynihan believes the Fed will be cautious about rate cuts, as it remains uncertain about the impact of tariffs. He suggested the central bank may want to preserve the purchasing power gained over the past year and should not rush to stimulate an economy already growing at 2%.

He also argued that interest rates should stay closer to a “real rate” of around 3%, rather than returning to the near-zero levels seen from the financial crisis through the COVID-19 pandemic.