TechFlow, December 30 — Bank of America CEO Brian Moynihan warned on CBS News' "Face the Nation" that the market's focus on the Federal Reserve has become "obsessive." He emphasized that the U.S. economy is primarily driven by the private sector, not by the Fed's interest rate adjustments, stating, "The idea that our fate hinges on the Fed moving rates by 25 basis points seems utterly misguided to me."
Moynihan acknowledged the Federal Reserve's critical role during extreme situations such as financial crises and the pandemic but said that in normal times, "people shouldn't really feel its presence." He also warned that if the Fed loses its independence, markets will punish it.
The backdrop is Trump's ongoing demands for larger rate cuts and his pressure on the Federal Reserve. Capital Economics predicts that with core inflation likely to remain above the 2% target for the long term, the Fed may only cut rates by 25 basis points in 2026, potentially putting Trump and his chosen new Fed chair at odds almost immediately.
