Bank of America CEO Says US Consumers Could Become Discouraged Unless Rates Drop Soon

If the U.S. Federal Reserve does not start cutting interest rates relatively soon, U.S. consumers could become dispirited, Bank of America CEO Brian Moynihan said on Sunday. At the end of July the Fed kept the policy rate in the same 5.25%-5.50% range it has been for more than a year, but signaled that a rate cut could come as soon as September if inflation continued to cool.

"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," Moynihan told CBS in an interview.

"Once the American consumer really starts going very negative, then it's hard to get them back." Moynihan, pressed about Republican candidate Donald Trump's statement that presidents should have a say over Fed decisions, said people were free to give Federal Reserve Chair Jerome Powell advice and it was then his job to decide what to do.

"If you look around the world's economies and you see where central banks are independent and operate freely, they tend to fare better than the ones that don't," he said.