Bank of America CEO Brian Moynihan expects the Federal Reserve to raise interest rates three times this year, in September, November and December. He sees inflation settling in the "mid-2s" by the end of 2027 before easing toward the Fed's 2% target, and says the AI infrastructure buildout can absorb the higher rates.
Bank of America Chief Executive Brian Moynihan said he expects the Federal Reserve to raise interest rates three times this year, a degree of specificity that stands out against the more guarded language Fed officials typically use.
Three hikes penciled in for September through December
Speaking in a CNBC interview, Moynihan said he expects hikes in September, November and December, adding that policymakers currently believe three increases would be enough to bring inflation under control. He cautioned that the outlook could shift if inflation data keeps surprising to the downside, pointing to a recent month in which price growth came in better than expected: "it went down better than people thought".
On the broader trajectory, Moynihan said he expects inflation to settle in the "mid-2s" by the end of 2027, before gradually moving down toward the Fed's longer-term 2% target after that. He attributed the recent pickup in price pressure to the combined impact of tariffs and the ongoing war, both of which he said are now fading as drivers.
PCE data still running hot
Moynihan's remarks follow data the Commerce Department released last week showing the Personal Consumption Expenditures Index rose 3.7% annualized in June. Core PCE, which strips out volatile food and energy costs, increased 3.3% annualized, up 0.1% on the month, underscoring that underlying price pressure remains well above the central bank's target.
AI financing seen as insulated from further hikes
Moynihan also addressed what a rate hike path means for the artificial intelligence infrastructure buildout that major technology companies are funding. He said he does not expect further increases to meaningfully affect the short-term financing companies use for data center and AI infrastructure projects. He added that returns from data center investments are strong enough that companies should be able to absorb higher borrowing costs on long-term bonds as well, suggesting the AI investment cycle is unlikely to be significantly disrupted even if the Fed follows through on additional hikes this year.
Source: Investinglive RSS Breaking News Feed
Trading involves risk.
Risk Disclaimer
