Bank of America CEO on ‘challenges’ of inflation

In an interview with Yahoo Finance's Julie Human, Bank of America CEO discusses the challenges the Fed faces when dealing with inflation.

Video transcript

- The thing is inflation, as you mentioned, is that the biggest risk to that upside scenario and continued growth?

BRIAN MOYINIHAN: You know, the Fed has the tools to deal with inflation, but those tools generally don't feel good when they have to be applied. And that's one of the questions. So the Fed always tries to engineer a very soft movement and make it all sort of happen. But sometimes, it's harder than not. And that's the question on the table that the markets are going back and forth and every day. But we feel good.

If you look at, like, loan growth, whereas two or three quarters ago, we were saying, we may be at the bottom of the loan trough, you know, at post-pandemic, because, basically, coming into pandemic loans were here. They went up dramatically because the panic borrowing that went on around the start of the pandemic, then fell dramatically as people sort of said, Oh, jeez, it's not going to be bad, I don't need all this cash. So then they hit a stabilization through the end of the year in the first part of this year.

We saw an annualized growth rate double digits last year, last quarter. And that was continuously growth into this quarter, deposit growing. Yeah, so that kind of activity shows that companies are doing more and more. And labor markets are tight. Inflation, if they have to raise rates quickly to offset it, that could have an impact on the economy, which traditionally is not pleasant. But the reality is is that if they can stay ahead of it, it works.

And Central banks around the world all fighting this question of how to stay ahead of it, given a different circumstance with the uncertainty of a virus that-- a virus and a set of response to the virus that are unprecedented in every direction, fiscal, monetary, shutdowns, everything is just different. And so that's the challenge for everybody to think through.

But you'd rather have a challenge being thought through as loans are growing, deposits are growing, consumers are spending more, the economy is as big as it was. And so taking the accommodation out of the economy by slowing down purchases or raising rates is different in that kind of strong backdrop.