2023-06-06 11:58:00
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Investing.com – Bank of America (NYSE:) CEO Brian Moynihan said that while he’s relieved that lawmakers have found a solution to the debt ceiling crisis, “it’s not a good idea for the United States to go down this path.”
Moynihan told CBS on Sunday that the decision “provided temporary momentum in the markets and allowed us to confront the real economic issues and the real debt level issues that lie ahead.”
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He added that getting rid of the debt ceiling completely was a “political issue”.
“At the end of the day, we need to have a serious discussion regarding how much debt we can take on in this country, how much we can take on and how it’s spent,” he continued, stressing the impact of the financial health of the United States on the rest of the world.
Meanwhile, Goldman Sachs (NYSE:) cut the probability of the US economy entering a recession in the next 12 months to 25% from 35% previously forecast.
The Fed expects the Fed to hold at its current level at this month’s meeting, but will add a 25 basis point rate hike at the July meeting which would push the final interest rate to a range of 5.25%-5.5%.
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The biggest challenge, Moynihan said, is “the power of the American consumer.”
“They were making more money and they were spending it, what you see is that trend is going down,” Moynihan said.
But he said the Fed “won that battle.”
On predictions of a mild recession, Moynihan said the Fed’s tightening policies “have had their effects.” As consumer spending has been slowing since the beginning of the year until now.
Moynihan said that although Friday’s strong jobs report sends “some confusing and ambiguous messages,” the fact is that consumer activity is in line with the Fed’s targets.
He said other factors, such as the collapse of banks and the Treasury financing issue, had slowed the economy.
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