The U.S. economy is picking up steam after a first quarter of negative growth and rate hikes are “coming soon,” according to Bank of America (BAC) Chairman and CEO Brian Moynihan.
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Moynihan told FBN’s Maria Bartiromo on Monday that he expects the Federal Reserve to begin raising interest rates in the third quarter.
“Our experts believe September, and that’s ebbed and flowed, depending on the weekly data. So, if we get strong [employment] numbers Friday, people may move it back and forth. But … whether it’s September, October … it’s coming soon,” Moynihan said.
And this, according to Moynihan, is good news.
“It’s coming because the economy is fundamentally better, the unemployment rate is down, there’s a little bit of wage pressure. And I think Chairman Yellen, and the minutes, is very clear on what’s going to trigger them to move -- and I think most people project that crossover towards the third quarter.
“The first quarter was impacted by the weather … so, it was negative [GDP]. But our economists [expect growth of] 2.4% for the rest of the year, which means we need to pick up and grow nearly 3% or above for the rest of the quarters … and they feel business investment will pick up in the second half, oil prices will stay about where they are, and that will provide a good background for growth in the second half,” he said.
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Moynihan also sees signs of strength in the American consumer.
“Each month, about $50 billion is spent on Bank of America debit and credit cards … It is up 3% [year over year]. But importantly, what you see in that is more discretionary spending … that means people are spending on … travel, entertainment and things that they want to spend money on – as opposed to food and gas, and things like that,” he said.
And, given the current cyber threat climate across the globe, Moynihan said the sky is the limit in terms of how much the bank is willing to shell out to prevent security breaches and protect client assets.
“What we do is spend whatever it takes. [Cyber security is the only] area of the company where they don’t have the intense scrutiny we have on the rest of the company on expenses and how money gets spent. This area, if they need to spend money to keep our clients trust in money safe, then we do it,” he said.