Davos 2023 | India incredibly important, predicted to grow at 6%, says Bank of America CEO

While the mood at Davos is such that quite a few believe the world is heading towards an ugly recession, some believe that it is not. Moynihan believes it would be a mild recession.

"Consumers are still spending, it's up year-over-year, but it has slowed down, which means the Fed's work is getting done. And so our team says a mild recession ended this year, next year inflation has tipped over," he said, adding that he believes the Fed won't be as aggressive in increasing interest rates to combat inflation.

"As I look at it, consumers are spending money, they have good money in their accounts. The credit quality bank institutions and the capitalisation liquidity in the US is strong. Unemployment in the US is still very very low. This means people working are getting paid and the wages are rising. Now that doesn't mean there aren't undercurrents that make it interesting, but the reality is it looks like a mild recession because the Fed has to bring the inflation really under control. They're making some good ground and now they have got to push it forward," he said.

The Bank of America CEO said there is no question the impact of higher rates in the US does not have a great effect to the borrowing costs of the rest of the world. "That is known and I think the US Fed and others are very mindful of it. However, the worst thing would be to have inflation in the US out of control because that would then require them to go even higher (interest rates)," he said.

Moynihan thinks people are sort of used to the rate structure now and it would normalise back to a positive slope and rate curve and as it does, he said some of the pressures would likely come off. "But there is no question about people borrowing US dollars, and when it strengthens because its interest rates are higher, they have to pay more money back at the local currency. That's tough," he added.

Moynihan said that people are now pulling back on hiring. He said there are certain industries that are laying off people, but that is because their business model is different. "But in general, the industry is just sort of pulling back and being more careful," he said.

Giving Bank of America's example, he said that it has already slowed down its hiring. "This time last year we had hired 4,000 people to keep up with the ones that leave, now we have only 2,000 people leaving," he said giving a sense of how fast the hiring has come down. He added that it is a different hiring practice though.

"Even with a 10 percent turnover rate we have to hire 20,000 people just to have a neutral head count, so we are out there hiring all the time. New people, experienced people and everything in between. But most companies like that, what you do is you aim, you keep that head count right in line a little tougher on managers and overhead and things like that it's just the way good managers manage," he added.