NEW YORK, Nov 8 (Reuters) – Bank of America (BAC.N) Chief Executive Brian Moynihan said on Wednesday that the U.S. economy will avoid recession even as consumer spending and commercial borrowing slow. He said he expected a soft landing.
“Our research team is the best in the industry and we have moved into the soft-landing category. We will see an economic slowdown in the middle of next year,” Moynihan said in a wide-ranging interview at the Reuters NEXT conference.
He said banks’ consumer spending slowed to 4.5% in October from 4%, about half the pace at the beginning of the year, while corporate customers were not borrowing as much.
In recent months, Mr. Moynihan has cited healthy consumer credit and spending as a sign that the U.S. economy may avoid recession. His views often contrasted with the pessimism of his peers.
Economists at Bank of America predict the U.S. economy will grow 2.7% this year and 0.7% in 2024. In the so-called soft landing scenario, economic growth slows but remains positive.
Economists also expect the U.S. Federal Reserve to raise rates again in December, hitting its final range of 5.50% to 5.75%.
Moynihan said a rate cut is expected in the second half of next year, but it’s possible, though not certain, that the Fed will raise rates again.
“It will take until the end of 2025 for the inflation rate to fall to the low 2% range,” he said.
Moynihan said there is a “huge pipeline of activity” in investment banking.
[1/3]Bank of America Chairman and CEO Brian Moynihan speaks with Reuters reporter Lanan Nguyen at the ReutersNext Newsmakers event in New York City, USA, November 8, 2023. Reuters/Brendan McDiarmid Obtaining license rights
He said the bank is looking to expand its team focused on middle-market investment banking.
“We’re moving our investment banking capabilities further into the market, going from 60 to 200 employees and doubling,” Moynihan said.
Bank of America traders posted the highest profits in more than a decade in the third quarter, while investment bankers endured an industry-wide downturn.
The company reported in October that its third-quarter profit beat Wall Street expectations as it made more money on loan interest payments, in line with other large lenders.
Succession planning on Wall Street has been in the spotlight in recent months as the terms of the financial crisis-era leaders extend.
Moynihan said the bank has a succession plan in place, but declined to provide a timeline.
“Once I decide, or the board determines that my time is up, I will activate that plan,” he said.
Morgan Stanley CEO James Gorman, who took over at the same time as Moynihan in 2010, will hand over the reins to Ted Pick at the end of the year. In 2021, Moynihan signaled that he intended to drive the company through the next decade.
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Additional reporting by Tatiana Bautzer.Editing: Chizu Nomiyama, David Gregorio, Edward Tobin
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