To fight inflation, Fed has to 'dramatically reduce' growth rate: Bank of America vice chair

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Fed has to ‘dramatically reduce’ growth rate to fight inflation: Bank of America vice chair

Bank of America Vice Chairman and CIO Keith Banks argues that the growth rate could be as low as 0.4% by the end of 2023.

Keith Banks, Bank of America Vice Chairman and CIO, joined "Mornings with Maria" Wednesday to discuss inflation in the U.S. as he makes a plea to the Federal Reserve to "dramatically reduce the rate of growth in order to tackle inflation."

KEITH BANKS: Look, the Fed has to dramatically reduce the rate of growth in this country in order to tackle the inflation problem we have. And we have an inflation problem… Global research is saying that we're going to see two and a half to 2.6% real growth this year. That's going to drop the 1.5% next year. And by the fourth quarter of 2023, we think growth could be as low as 0.4%. So that's going to that's going to be a big drag on earnings.

Bank of America Vice Chairman Keith Banks discusses the state of the U.S. economy during an appearance on “Mornings with Maria” Wednesday, June 1, 2022. (Fox News)

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… Global research is saying that we're going to see two and a half to 2.6% real growth this year. That's going to drop the 1.5% next year. And by the fourth quarter of 2023, we think growth could be as low as 0.4%. So that's going to be a big drag on earnings. And one of the things that we're concerned about at this juncture is we think you're going to see about $230 of earnings this year. Consensus still has earnings up between 6 and 8% next year. We think that's too much. We think you're going to look at probably a flat year at best. And then the tricky thing is what multiple do you put in those earnings? If you put 17 times, which would still be above the longterm average that gets you to 3900. If you put 18 times you're up to 4100. So we think we're going to be range bound. 

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US has an inflation problem: Bank of America vice chair

Bank of America Vice Chairman and CIO Keith Banks discusses investing in today’s markets, the impact of inflation and domestic crises on the economy and the unemployment rate.

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