DAVOS, Switzerland — Bank of America (BAC) CEO Brian Moynihan is pushing back on the view held by some investors that the Federal Reserve will slash interest rates in 2023 to jumpstart a potential recessionary U.S. economy.
“They may leave [rates] higher for longer just to make sure they squeeze out that services-side inflation,” Moynihan told Yahoo Finance at the World Economic Forum (WEF) on Tuesday.
Moynihan pointed out that his research team is expecting a “mild” recession this year. Economic growth will reaccelerate in 2024 and be sustained into 2025, Moynihan added.
Whether the U.S. slips into a recession this year — perhaps triggering the Federal Reserve to respond with a dose of market-friendly rate cuts — is one of the most hotly debated topics at the WEF.
A PwC global CEO survey, which polled 4,410 CEOs in 105 countries and territories in October and November 2022, found that 73% of CEOs believed global economic growth would decline over the next twelve months.
Nearly 40% of CEOs surveyed said their organizations wouldn’t be economically viable in 10 years if they do not transform.
Meanwhile, a survey of WEF chief economists found that two-thirds expect a worldwide recession in 2023. About 18% believe the recession is “extremely likely.”
While BofA is in the recession camp, Moynihan noted that consumers continue to spend at a brisk pace to kick off 2023.
“They’re spending nicely,” Moynihan added. “The money in their accounts continues to be solid.”
