Fed Rate Cuts Essential for Consumer Confidence

(Reuters) – Bank of America CEO Brian Moynihan warned that if the U.S. Federal Reserve does not start cutting interest rates soon, U.S. consumers may become dispirited.

At the end of July, the Fed maintained its policy rate in the 5.25%-5.50% range, which has persisted for over a year, while indicating a potential rate cut as early as September if inflation continues to ease.

Moynihan stated, “They’ve told people rates probably aren’t going to go up, but if they don’t start taking them down relatively soon, you could dispirit the American consumer.” He emphasized the challenge of restoring confidence once consumers adopt a negative outlook.

Regarding comments made by Republican candidate Donald Trump that presidents should influence Fed decisions, Moynihan noted that while people can advise Federal Reserve Chair Jerome Powell, it remains his responsibility to make decisions. He argued that economies with independent central banks tend to perform better than those without.