- The Fed won't reach its 2% inflation target till 2025, according to Bank of America's CEO.
- Brian Moynihan added that data shows consumers are spending less, pointing to an incoming recession.
The Federal Reserve won't hit its 2% inflation target until 2025 - and a US recession is in the cards, according to Bank of America CEO Brian Moynihan.
US inflation cooled from its mid-2022 highs above 9% to 4.0% in May as the Fed hiked interest rates by a staggering 500 basis points since last spring. While cooling price pressures have offered some relief to consumers, the central bank remains determined to lower inflation to its target and has signaled two more rate increases before year-end.
"We think it will take [Fed officials] all of this year and all of next year and into 2025 before they get inflation in line with their long-term target," Moynihan said in a CNN interview on Tuesday. He also suggested the Fed could lift borrowing costs a few more times this year before cutting them next year.
Moynihan also noted that his bank's data shows consumers are reducing spending in line with 2% inflation, which is both "good and bad," he said.
"Good in that's what the Fed needs to see inflation under control. Not so good because it does mean we have a higher probability of a mild recession coming true," Moynihan said, adding that the downturn is likely to hit the US in the first part of 2024.