Bank of America CEO Brian Moynihan said it’s unlikely that the Federal Reserve will cut prices this year, as consumer spending remains strong.
“Our research team thought that the dynamics of the potential inflation effect could curb the Fed, so they’re removing all interest rate cuts from the table,” he told CNBC.
Moynihan explained that in the first 40 days of the year, bank customers spend about 6% of their money compared to last year’s peers. “It promotes price stiffness and calls for hardness,” Moynihan said. “You see the activity we say is probably at a time when the fees stay.
According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) rose 0.5% on a seasonally adjusted basis in January, while annual inflation rose 3%.
This is compared to Dow Jones estimates of 0.3% and 2.9%, respectively, according to a CNBC report. Core CPI, which excludes food and energy prices, rose 0.4% in January and increased by 3.3% per year, but estimates are 0.3% and 3.1%.
“The fees are limited, but the inflation progress we made was not sufficient,” Moynihan said, according to the report.
With inflation rates higher than expected, the Federal Reserve has a firm reason not to worry about short-term interest rate cuts, dampening market optimism. Traders had anticipated a 25 basis point cut in July 2025, but these expectations have shifted to October 2025.
The SPDR S&P 500 ETF Trust (SPY) and Investco QQQ Trust, Series 1 (QQQ) fell nearly 1% before the market on Wednesday, but nearly 1% with the exception of losses.
According to CNBC, the Treasury Department’s 10-year yield rose 10 basis points to 4.643%, while the two-year yield rose 9 basis points to 4.386%. iShares 7-10 Year Financial Debt ETF (IEF) traded 0.75% lower at noon on Wednesday.
In Stock Towatt, retail sentiment is trending from “very bearish” territory for these ETFs.
Spy Emotion Meter and Message Volume as of 11:54am on February 12, 2025 | Source: StockTwits
QQQ’s emotion meter and message volume as of 11:54am on February 12, 2025 | Source: StockTwits
In particular, Federal Reserve Chairman Jerome Powell on Wednesday said in front of the Senate Banking Committee that central banks do not need to hurry to cut interest rates, while inflation is declining significantly. , said it is still above the 2% target.
“Our policy stance is far less restrictive than ever and the economy remains strong, so there is no need to rush to adjust policy stance. Policies are either too fast or too often. I know that too much can hinder inflation progress,” Powell said in his prepared remarks.
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