Bank of America CEO Predicts “Slight” Recession, Interest Rates Unlikely to Fall Until 2024

Bank of America CEO Brian Moynihan is predicting a “slight” recession this year, along with a warning that interest rates won't fall until 2024. The investment bank Goldman Sachs has recently raised its chances of a US recession occurring in the next 12 months from 25% to 35%.^[0] Moynihan made his prediction during the Financial Review's Business Summit in Australia and discussed the impact of the recent collapse of Silicon Valley Bank and other small banks on the broader banking sector.

He said that despite the recent layoffs, the labor market is still tight and companies have access to capital, albeit at higher costs.^[1] Powell also reiterated the Federal Reserve's hawkish stance in his testimony to Congress and said that the Fed could return to rate hikes larger than 25 basis points.

Bank of America strategists led by Michael Hartnett warned that the global rate hikes over the past year were not setting investors up for a Goldilocks economy.^[2] Instead, they said it was the “prelude to a hard landing and credit events”.^[2] Moynihan also said he anticipates the economy to contract in each quarter by between 0.5% and 1%, resulting in a “very slight recession in the scheme of things”.^[3] He also noted that interest rates are unlikely to fall until sometime in the second quarter of 2024.^[1]

Overall, the news from the US banking sector is not looking positive. Goldman Sachs has increased its chances of a US recession to 35%, and Bank of America CEO Brian Moynihan is predicting a “slight” recession this year. The Federal Reserve appears to be taking a hawkish stance and may return to rate hikes larger than 25 basis points. Bank of America strategists have warned that the global rate hikes over the past year are a prelude to a hard landing and credit events. These events could have a further impact on the US economy, and it appears that a recession is likely in the near future.

0. “Goldman Sachs: Threat of recession is most important issue for equities” Insurance News Net, 6 Mar. 2023, https://insurancenewsnet.com/innarticle/goldman-sachs-threat-of-recession-is-most-important-issue-for-equities

1. “Bank of America CEO Predicts “Slight” Recession This Year” Watcher Guru, 8 Mar. 2023, https://watcher.guru/news/bank-of-america-ceo-predicts-slight-recession-this-year

2. “The ‘crashy vibes of March' could be prelude to a hard landing, warns Bank of America strategist” MarketWatch, 10 Mar. 2023, https://www.marketwatch.com/story/the-crashy-vibes-of-march-could-be-prelude-to-a-hard-landing-warns-bank-of-america-strategist-d1c42538

3. “Bank of America CEO predicts ‘slight’ US recession this year” Al Jazeera English, 7 Mar. 2023, https://www.aljazeera.com/economy/2023/3/7/bank-of-america-ceo-predicts-us-recession-this-year