Q3 2022 Bank Executive Business Outlook Survey

With inflation remaining stubbornly high, a majority of bank executives (63%) said interest rates won't peak until the first half of 2023.

But most bankers believe the central bank will only increase the Federal Funds target rate by another 100 to 150 basis points before leveling off. If that turns out to be correct, it means the country is closer to the end rather than the beginning of the current rate increase cycle.

With regard to the Fed guiding the economy to a soft landing with little or no economic downturn, bankers remain pessimistic. A majority of survey respondents (52%) said the U.S. economy is already in a recession, or will be by the end of the year. Another 47% believe a recession will take place in 2023, with most of those saying it will occur in the first half. Only about 1% said a recession is not imminent.

Fifty-eight percent of bank executives said that the central bank is hiking rates too high and too fast, up 6 points from the same question asked in the first quarter of 2022. However, confidence in the Fed's handling of interest rate policy has grown a little over the same time period. Thirty-two percent of bankers surveyed now say that the Fed is on the right track in its efforts to tame inflation, compared to 27% in the first quarter survey and 21% in the second quarter.

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