Forty-six percent of banking leaders expect economic conditions will worsen over the coming 12 months, while even more say the Federal Reserve will not handle rising interest rates properly, according to a recent IntraFi Network study of CEOs, presidents and CFOs from 422 banks.
The survey, conducted online from April 4-17,found that 52 percent of bank leaders are concerned that the Federal Reserve will raise rates too fast and high. As reported by the Associated Press, after the Fed increased interest rates by a quarter-point to a half-point last month to combat decades-high inflation readings, Fed Chair Jerome Powell said earlier this month that sharp interest rate increases will likely occur in the coming months, beginning at the Fed’s May policy meeting. Wall Street investors anticipate the Fed will raise its key rate by a half-point at each of the next three meetings.
A majority of bankers (38 percent) said the Fed Funds target rate needs to increase 75 basis points before they can raise their deposit rates. Thirty-four percent said that number is 50.
Bankers said the two top issues they are focused on include the CFPB’s crackdown on “junk” fees and its small business reporting proposal under Section 1071 of the Dodd-Frank Act, which will require banks to compile and report data on credit decisions for small-, women- and minority-owned businesses.
Other findings in the report included:
- Forty-four percent said there has been a “moderate increase” in loan demand from 12 months ago. A similar percentage expect there to again be a “moderate increase” over the coming year.
- More than 3 in 4 said that bank access to capital was the same as 12 months ago. A similar percentage that will likely stay the same over the coming 12 months.