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Bank of America CEO warns sticky inflation could force Fed to hike
Bank of America reversed its prior outlook, now expecting rate increases to begin toward the end of 2026 after it previously anticipated Fed cuts.
Bank of America CEO Brian Moynihan said inflation is likely to remain “sticky enough” to delay the relief households have been expecting, even as he described the broader economy as still showing resilience. In an interview with CBS News on “Face the Nation,” Moynihan pointed to continued pressure from housing, food, and fuel costs, and said the strongest spending growth is coming from consumers with the most financial cushion.
Moynihan also warned that higher energy costs are flowing through the pipeline, raising business concerns about the cost of goods used in plastics, materials, manufacturing, and transportation. He said the slow pace of disinflation is drifting down but “slower than people would like,” which can complicate policymakers’ path.
The CEO said the bank has shifted its interest rate outlook, with its view moving from anticipated Fed cuts to a belief it may need to raise rates to contain inflation. Moynihan indicated the tightening cycle would likely begin “more towards the end of the year,” with additional increases potentially extending into next year.
For perspective, the report notes that in Bank of America’s June 2026 outlook the bank expected three quarter-point Fed rate hikes in September, October, and December 2026, totaling 0.75 points. The setup, according to Moynihan, could keep inflation in the system longer while renewed hikes add pressure to already strained household budgets.