Bank of America CEO: Chances of U.S. recession ‘overrated’

Bank of America Chief Executive Brian Moynihan on Monday downplayed his view of a recession, saying the chances of the economy slipping into a recession are “overrated.”

In an interview with CNBC, Moynihan acknowledged that aggressive rate hikes by the Fed will slow economic growth and increase the likelihood of a recession. However, he noted that few economists have explicitly predicted an imminent contraction in the economy.

“The probability of a (recession) is rising, and investor panic is growing, but the reality is that no one really thinks the economy is ‘going into a recession,'” Moynihan said. The Fed’s current fight against inflation is a priority, Moynihan said. “Huge task,” and suggested that economic development in the coming years will largely depend on the Fed’s ability to strike a balance between reining in price increases and maintaining economic growth.

In addition, Moynihan added that the economy will continue to be supported by the consumer sector, with people still holding a lot of money the government has given out to stimulate the economy during the pandemic. “It’s not happening that people are spending less. It could happen, but at least it’s not happening yet.”

Talking about the impact of rising interest rates, Moynihan argued that rising wages could offset the impact of rising interest rates on the mortgage market. He pointed out that the current slowdown in mortgage lending is coming from the refinancing market, not the primary financing market.

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