Bank of America CEO Brian Moynihan has predicted a “slight,” recession this year, warning interest rates won’t fall until 2024. Specifically, Yahoo reported Moynihan’s prediction that interest rates could cease falling until the second quarter of next year.
Moynihan was speaking at the Financial Review’s Business Summit in Australia, discussing the country’s current economic outlook. Moreover, the CEO noted “the labor market is still very tight,” with businesses having “access to capital, albeit at higher costs.”
Bank of America CEO Talks Recession and Interest Rates
Speaking yesterday, Federal Reserve Chair Jerome Powell gave the country a grim prognosis. Stating his expectation that interest rates could be on an upward trajectory. Despite a year-long hike in interest rates to battle inflation, and a potential recession, for the country in the coming year.
Now, Bank of America CEO Brian Moynihan predicted a “slight” recession this year. Moreover, the executive warned that interest rates are not likely to fall until sometime in 2024. Conversely, interest rates are currently sitting at 4.75%, the highest since 2007. Coinciding with Powell’s statements yesterday, it seems they may get even higher.
“They’re going to have to hold it there for a long time because frankly, the labor market is still very tight,” Moynihan stated. Adding, “Despite what you hear about layoffs, and financial conditions are strong, so companies have access to capital, albeit at higher costs.”
Additionally, Moynihan noted that consumer activity was unaffected by the Federal Reserve interest rate hikes. Noting that they actively “have money in their accounts,” which could force the Fed’s actions even more.
“Our base projection is or a recession to occur in the U.S. economy beginning in the third quarter of 2023, occur through the fourth quarter of 2023, and into the first quarter of 2024,” Moynihan remarked. Ultimately, stating that an economist contraction between 0.5% and 1% every quarter will result in “a very slight recession in the scheme of things.”
Conclusively, Moynihan predicted an economic slowdown so tame “a lot of people aren’t going to see that much of it,” in his opinion. Describing it as a “technical recession as opposed to a ‘deep drop.'”