Investors may be concerned or uncertain about today’s CPI report, but
Bank of America
CEO Brian Moynihan isn’t losing any sleep.
While some market participants might have hoped for a clear signal that the fight against inflation has been won, today’s report makes it clear the Federal Reserve still has more work to do. Moynihan, though, is focused on the bigger picture.
“The trend is clear,” says the BofA CEO in an interview today with Barron’s, “inflation is peaking.”
“We have to step back and realize these month-to-month data sets are going to bounce around a little bit…” says Moynihan. “But the broad trend is inflation has peaked in some areas and not quite peaked in others, and that’s good and that’s also the intended outcome [of the Fed’s rate hike campaign.]”
January’s consumer price index data came in at 6.4%, a smaller-than-expected decline in the annual pace of rising consumer prices, and the biggest monthly jump up in the CPI since June. It was the seventh straight monthly decline in the closely watched index that tracks inflation.
The stock market’s response to January’s inflation number was mixed, reflecting various signals in the report, i.e., that price growth is coming down, but any progress in combating inflation is slowing.
Moynihan, CEO of the nation’s second largest bank by assets, after JPMorgan Chase, also says that, “we’ve just come off about 5,000 year low [for interest rates].
“[The Fed] want a more normal interest rate environment than we’ve had for [the past] 15 to 20 years, so all that would say they might care a little bit more letting inflation run a little hotter to ensure that it actually gets a 2%.”
Moynihan also said that the Fed was “late to the game,” as far as raising rates, and that now “it’s going to take them longer than they originally thought.”
Write to Andy Serwer at email@example.com