Delinquent debt is piling up. Here's why it's not a reason to worry about the US consumer, according to BofA CEO Brian Moynihan.

• There's no need to worry about consumers falling behind on debt payments, BofA's Brian Moynihan said.
• Deliquency rates on credit card and auto loans are normalizing and are close to 2019 levels.
• The CEO said rate cuts from the Fed are needed to reduce "drag" on the economy.

Consumers are falling behind on their credit card and auto loan payments, but that's actually not such a big deal for the economy, according to Bank of America CEO Brian Moynihan.

Moynihan shrugged off higher consumer delinquency rates in an interview with CNBC on Wednesday. Late payments on consumer credit card loans have ticked slightly higher over the last quarter, with 9.1% of credit card balances and 8% of car loans transitioning into delinquency, according to the New York Fed's latest Household Debt and Credit Survey.

That's sparked concern about the strength of the US consumer, especially within the context of higher interest rates. But while some forecasters have warned of a full-blown consumer recession, delinquency levels are actually close to where they were prior to the pandemic, which was a "very good" credit environment for banks, Moynihan said, brushing off worries about household finances.

"We're seeing them come out where we thought they would come out, and basically delinquencies have gone back to where they were to more or less in '19," Moynihan said. "Consumers have the money in their accounts, they're spending wisely, they're employed, they're getting paid more."

Still, Moynihan acknowledged a slightly higher unemployment rate compared to levels last year. Inflation has also been "tough" on some income groups, he added, with households likely having depleted their excess savings from the pandemic late last year, according to San Francisco Fed economists.

That makes the case for the Fed to start cutting interest rates, which have been weighing on economic growth, Moynihan added.

Bank of America strategists are forecasting three 25 basis-point rate cuts this year. Those rate cuts will continue for at least the next 6-8 quarters, Moynihan predicted, though he noted that markets were in a higher-for-longer rates environment.

Markets have been on high-alert for warning signs of a recession, with some fearing that the Fed's rapid interest rate hikes in 2022 and 2023 have overtightened financial conditions and that the Fed won't be able to respond in time with rate cuts.

Still, GDP grew 3% in the second quarter. The job market also remains on steady footing, with the unemployment rate ticking slightly lower to 4.2% in August, according to the Bureau of Labor Statistics.