Bank of America CEO warns that the market's excessive focus on the Federal Reserve is "putting the cart before the horse"

According to TechFlow, on December 30, Bank of America CEO Brian Moynihan warned on CBS News' "Face the Nation" that the market's focus on the Federal Reserve has become "obsessive." He emphasized that the U.S. economy is primarily driven by the private sector, not by the Fed's interest rate adjustments. "The idea that our fate depends on the Fed adjusting rates by 25 basis points is, in my view, completely out of hand," he said.

Moynihan acknowledged that the Federal Reserve plays a key role in extreme situations such as financial crises and the pandemic, but stated that during normal times, "people really shouldn't feel its presence." He also warned that if the Fed loses its independence, the market will punish it.

The background is that Trump has been continuously demanding larger rate cuts and pressuring the Fed. Capital Economics predicts that, as core inflation will remain above the 2% target for a long time, the Fed may only cut rates by 25 basis points in 2026, which would lead to an almost immediate confrontation between Trump and his newly appointed Fed chair.