Bank of America’s CEO Brian Moynihan indicated that the Federal Reserve is unlikely to reduce interest rates soon, citing robust consumer spending as a key factor.
Bitcoin and altcoins marginally fell as lower rates would be beneficial for the crypto markets, as it would lead to more liquidity flowing into capital markets.
During a CNBC interview, Moynihan revealed that Bank of America’s retail customers have been spending approximately 6% more this year compared to the same period in 2024, a noticeable acceleration from last year’s end. “That’s driving price firmness, demand firmness,” he explained, adding that this spending momentum suggests the Federal Reserve will likely maintain current interest rates for the time being.
The U.S. Bureau of Labor Statistics recently reported a stronger-than-expected rise in the consumer price index, prompting a shift in market expectations regarding future interest rate changes.
While the Federal Reserve had already begun easing rates in September 2024, it continues to face challenges due to persistent inflation, limiting its ability to make significant cuts. In its last meeting, the Fed kept its benchmark rate unchanged between 4.25% and 4.5%.
Moynihan acknowledged that while interest rates are restrictive, there hasn’t been enough progress in taming inflation to warrant cuts. Bank of America’s research team concurs with this view, predicting that rate reductions are unlikely in the near term due to ongoing inflationary pressures.