Most bank executives continue to doubt the Federal Reserve’s ability to avoid a recession, according to a recent IntraFi survey of bank CEOs, presidents, CFOs and chief operating officers from more than 450 U.S. banks.
According to the third quarter report, 58 percent of executives say the Fed will overcorrect for inflation while fewer than one-third believe the Fed is on pace to properly address high inflation rates.
The Federal Reserve Open Market Committee in September raised interest rates by 0.75 points for the third straight month and is expected to once again in November to combat decades-high inflation rates. The year-over-year Consumer Price Index increased 8.2 percentage points in September.
More than half of bank executives said the U.S. economy was already in a recession or will be in one by the end of the year. Thirty-six percent expect the recession will begin in the first half of next year.
Forty percent said overall economic conditions remain the same as 12 months ago. One-in-three say conditions have moderately worsened, while 23 percent say they’ve moderately improved. Fifty-six percent say conditions will moderately worsen over the coming 12 months.
Other findings included:
- One third of bankers said their loan demand had increased from 12 months ago while 30 percent said demand had moderately decreased. Forty-five percent said they expected loan demand to moderately decrease over the next 12 months. Twenty-one percent expected demand to stay the same.
- Fifty-six percent of executives said their bank’s funding costs had moderately increased over the last 12 months. Twenty-seven percent listed a significant increase. A nearly even split said funding costs would moderately or significantly increase over the coming 12 months, at 47 percent and 48 percent, respectively.
- Access to capital remained unchanged for three-in-four bankers compared to 12 months ago. The vast majority of bankers expected capital access to remain unchanged in the coming 12 months as well.