The Federal Reserve may respond to Trump.
Bank of America CEO Brian Moynihan said if the Federal Reserve wants to engineer the right monetary policy, it should be on Trump’s watch.
“They’ve got a new administration with new fiscal policies, and monetary policy has to respond to that,” BofA’s chairman and CEO told Yahoo Finance at the World Economic Forum in Davos, Switzerland.
“We’re not a central bank-driven economy. We’re a private-sector-driven economy, the government supports it, and the central bank responds to that, and they have to think about what kind of stimulus they’re going to have,” Moynihan added. It’s to respond.”
Indeed, the Federation has always been united in maintaining its independence from the White House.
In the year Heading into 2025, markets have been hampered by the Federal Reserve’s failure to make aggressive rate cuts alongside a stronger-than-expected US economy.
The consensus among Fed officials is now for two rate cuts this year, down from four forecasts in September. Part of monetary policy worries about inflation – San Francisco Fed President Mary Daly was non-committal on further rate cuts on a recent Yahoo Finance Open Auction podcast.
Read more: What the Fed’s Rate Cut Means for Bank Accounts, CDs, Loans and Credit Cards
Possible measures by the Trump administration, such as tariffs on China, further dampened inflation.
Not helping matters was a fresh increase in fuel prices to start the year. The US economy has also shown remarkable resilience, including the December jobs report.
“The fact that the narrative has changed is because the economy is strong and the labor market is strong,” BlackRock’s chief investment and US portfolio strategist Gargi Choudhury said in the opening remarks. “I think it’s fair to assume with a very open mind, based on the information at hand, one to two more rate cuts this cycle.”
Despite Fed uncertainty, Bank of America shares have risen 11.5% since Donald Trump’s victory in November. The S&P 500 rose 4.7% over the same period.
Banking industry experts said the rally reflects possible easing of regulations under Trump, particularly in the face of capital requirements.
Moynihan said of what he would like to see from the Trump administration, “I think the capital[requirements]we’re looking for are a little more reasonable.” Secondly, you want to see some liquidity and other rules that are layered and really have a negative impact on holding capital, which doesn’t make a lot of sense because some other boring stuff goes on. On Banking Regulation.”
