Strong consumer spending and economic data show that Fed needs to start raising interest rates, BofA chief said.
Moynihan points to the continued strength of consumer spending despite four-decade-high inflation and worries about the economy and the pandemic. Spending on the bank's credit and debit cards in January was up 17% from a year earlier. That's despite January typically being a slower month after the frenzy of the holiday shopping season.
Moynihan spoke with the Associated Press about the data, as well as his thoughts on inflation and the Federal Reserve's coming interest rate hikes. The interview has been edited for clarity and length.Brian Moynihan: So the narrative we've been hearing is that consumer spending was up substantially in the fourth quarter and it appears like that trend is going to continue.
Consumer account balances are still building. That means those higher wages have been a net positive even with their spending rising. On the other hand, they're not doing it through leverage. Look at credit card balances. We're still 15% behind where we were pre-pandemic and if you look at the payment rates on those credit card balances, they are still running at a very high rate. That to me says consumers are not taking on debt to keep this spending up.
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