CNBC Television · Sep 23, 2026
With Brian Moynihan, CEO of Bank of America
Bank of America holds $2 trillion in deposits and pays its customers 2% on them, Brian Moynihan said, so a rise in rates adds to its profit.
Investors had been selling bank stocks on worry that profits are peaking as the yield curve flattens, with 2-year and 10-year Treasury yields at multi-year highs. Moynihan called those rates closer to normal than high, and said the Fed still has more raising to do.
"So when rates go up, it actually benefits our company. That's been true forever."
Brian Moynihan, CEO of Bank of America, spoke to CNBC Television about a balance sheet built on checking and business transaction accounts, and a research team that he said was "a bit out there" when it called for three Fed rate rises.
The full segment is covered here so you can skip it.
Here are the 5 takeaways that matter.
Key Takeaways
His bank's economists expect two more Fed rate rises this year
Even with three rises, they see inflation only starting to approach 2% around the end of 2027
A 4.5% to 5% 10-year yield is normal, in his view, for a growing US economy
The budget deficit matters more for longer-term rates than for short-term ones, and he said it has to be brought under control
The Fed will have to keep raising rates over the next 6 to 12 months, he said
Higher rates add to Bank of America's profit because it pays an average of 2% on $2T of deposits
1. Inflation Is Sticky
The anchor opened on bank stocks, which had been under pressure on worry that profits are peaking while the yield curve flattens. The interviewer noted that 2-year and 10-year yields were each at multi-year highs, largely on concern that the economy is running too hot. Moynihan has long said inflation would be sticky, and she asked what it would take to bring it back to target.
He said short-term and long-term rates have to be looked at separately, because different things move them.
Inflation is above where anyone wants it
But the number one thing is that inflation is higher than people want it to be.
Brian Moynihan
The Fed had just raised rates by 25 basis points. Bank of America's economists had been calling for three increases, which he said once looked like an outlier and now looks less so.
His economists still expect more increases this year
Our team still has two more rate rises this year.
Brian Moynihan
Even with three rises, the team expects inflation to start approaching 2% only around the end of 2027. The causes have also changed, he said. Two years ago it was one set of pressures. Now it is the knock-on effect of higher oil prices, and wages have started to grow faster.
Inflation does not leave quickly
And inflation is sticky. It's hard to get out of the system.
Brian Moynihan
2. A 5% 10-Year Is Normal
Moynihan said the rates that worry investors are closer to where they should be. A Fed funds rate of 3% to 4% alongside a 10-year Treasury yield of 4.5% to 5% is the shape a strong economy produces, in his account.
Today's rate structure is the natural one
Now the good news is this people think it's higher and it's actually more normal to have a rate structure with a three, three and a half, 4% Fed funds rate to four and a half, 5%, ten year rate. That's more of a natural curve and a curve that is consistent with a growing strong U.S. economy.
Brian Moynihan
Rates stayed low for many years after the financial crisis, he said. They had barely returned to normal when COVID hit, and had barely recovered again when the Fed started cutting. Now they are back up.
Investors are adjusting to a new environment
So a little bit is just getting used to different environment than we were post-financial crisis for many, many years.
Brian Moynihan
3. The Deficit and the 10-Year
Longer-term Treasury yields follow a different driver from the Fed, Moynihan said.
The deficit weighs on longer-dated bonds
The longer term is more affected by the budget deficit, and we've got to get that under control.
Brian Moynihan
Demand for Treasuries is also changing. Buyers now have alternatives from borrowers that are good credits and pay 300 to 500 basis points more, he said, and that competition pushes Treasury yields up. The effect grows the further out the maturity.
4. Two More Hikes in 12 Months
Moynihan returned to the Fed and said it is not done.
The Fed will raise at least twice more
But inflation has got to get under control. The Fed is already moved once. I think they'll continue to move, whether it's two times this year again or one time and one time early next year.
Brian Moynihan
The goal is to keep inflation falling
But over the next six months to 12 months, they'll have to move the rate structure up to make sure the inflation continues its path down.
Brian Moynihan
5. $2T of Deposits at 2%
The interviewer asked what a flattening yield curve, which was happening again that day, means for bank profits and for Bank of America's forecast of net interest income, the gap between what it earns on loans and securities and what it pays depositors.
Net interest income is growing regardless
Our net interest income is very strong growth anyway because of the dynamics of our balance sheet.
Brian Moynihan
The bank pays little on a very large deposit base
But we sit with $2 trillion in deposits. The total rate paid to the customer is 2%.
Brian Moynihan
The rate is low because much of that money sits in consumer checking accounts and business transaction accounts. That structure means higher rates help the bank, he said.
Rising rates have always helped Bank of America
So when rates go up, it actually benefits our company. That's been true forever.
Brian Moynihan
The level of rates matters to banks, Moynihan added. With a Fed funds rate of half a percent, a bank could not cut what it paid below zero, because it does not charge people to hold their money, and its margins were squeezed. At today's rates, he said, that squeeze is gone.
Bonus Insights
The Fed's job is to set rates at the right level
Moynihan said the pressures behind inflation have shifted over two years, from one set of causes to oil and wages, and that the Fed's answer is the same.
So there's a lot of different impacts over time, but they've got to get the rate structure right.
Brian Moynihan
Moynihan's bottom line is that the Fed has to keep raising rates until inflation is under control, that a 10-year yield near 5% is normal for a strong economy, and that higher rates help a bank that pays 2% on $2 trillion of deposits.
Products, Companies & Tools Mentioned
Bank of America (Moynihan's bank, with $2 trillion in deposits on which it pays customers an average of 2%)
Federal Reserve (Had just raised rates by 25 basis points; Moynihan expects it to raise at least twice more over the next 6 to 12 months)
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