Bank of America’s Moynihan says Fed can withdraw political aid

Bank of America CEO Brian Moynihan urged the Federal Reserve to ease its ultra-relaxed monetary policy, saying on Monday that the urgency of the pandemic response was diminishing.

Speaking to the central bank one day starts its June political meeting, the head of America’s second-largest bank by assets told CNBC that inflation concerns are a priority for executives of small businesses.

At the same time, the Fed continues to buy at least $ 120 billion in bonds each month and keeps benchmark short-term lending rates close to zero.

“I think the reality is that hosting is not needed at the same level, clearly,” Moynihan told CNBC’s Becky Quick in a “Squawk Box” interview. “The question is, when do you take it off? And the big debate is when is it [inflation] transient or non-transient. “

With consumer price inflation around 5% year over year, the Fed is well ahead of its 2% inflation target.

However, policymakers insist that the recent rise is due to factors that will pass, including supply chain bottlenecks and pandemic demand, while annual numbers are skewed by the state of the 2020 economic shutdown.

“That’s the real question,” Moynihan said. “I think we need to be a lot more careful right now than we have been, because we see the wages going up, you are seeing the sticky prices going up.… Getting there.”

Banks are inundated with deposits and reserves as the Fed keeps rates low and continues to buy treasury bills and mortgage-backed securities every month.

At the same time, Moynihan said consumer spending has grown 20% since the start of 2019 and small businesses have shifted from damage control mode to struggle to meet growing demand.

For small businesses, “Six months ago it was all about pandemic, pandemic, pandemic,” Moynihan said. “So what’s the word? Get labor, inflation and shortages.”

Moynihan said these pressures were causing price increases.

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