Bank of America CEO Brian Moynihan says no rate cuts could be good

The banking boss—whose work has been lauded by the likes of Warren Buffett—said his team’s hypothesis is that the Jerome Powell-led Fed will lower rates four times in 2024. That’s one higher than initial indications provided by the Fed’s dot plot (a chart updated quarterly projecting the interest rate’s short-term moves) but two lower than the Wall Street consensus of six cuts.

And while many on the street might be banking on this scenario, Moynihan isn’t hanging his hat on it. In fact, it would actually be good news for his institution if the Fed didn’t cut rates as early as predicted.

If the Fed doesn’t cut rates soon “from our company’s perspective, that actually helps a little bit,” Moynihan told CNBC Friday. He explained this is “because [of] the vast amount of short floating rate instruments we have on the asset side and the cash, the $500 billion—almost $600 billion of cash—we put with the Fed overnight in very short Treasuries.”

Moreover, Moynihan laid out that a delay to cuts could benefit the consumer. Concerns about inflationary pressures are still chiming: geopolitical tensions such as the Russian invasion of Ukraine and the Israel-Hamas war are pushing up oil prices, with shipping reroutes around the Red Sea further adding to wider inflationary pressures.

In addition, the CPI (consumer price index) figures released last week for December were slightly more stubborn than hoped for. Seasonally adjusted, prices on the index rose 0.3% in December following 0.1% in November. Overall that brought the benchmark to 3.4% over the past 12 months, still well ahead of the Fed’s 2% target.

But despite these figures Moynihan notes that when the consumer began to show real signs of distress—or the “point of pain” as Bank of…