Bankers expect further interest rate hikes in 2023 | Techy Kings

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Most banking executives believe interest rates won’t peak until the first half of 2023, according to a new survey by financial technology firm IntraFi. The company surveyed executives at more than 450 banks nationwide and found that 63% of respondents believe the Federal Reserve will continue to raise rates through the first half of next year. However, most banks believe the central bank will only raise the federal funds target rate by another 100 to 150 basis points before going flat.

A majority of respondents (58%) believe the Fed will overcorrect for inflation, with 32% saying the Fed is on the right track and 10% saying the agency is not acting aggressively enough. More than half of bank executives (52%) believe the US will experience a recession by the end of the year, with another 36% believing a recession will begin in the first half of 2023.

In terms of what banks see, 83% of bankers report higher funding costs, an increase of 29 percentage points from the second quarter of 2022. Ninety-five percent said they expect funding costs to increase next year. The majority of banks (56%) also predict that loan demand will decrease over the next twelve months. Banks’ access to capital remains stable with 75% of respondents experiencing no change over the previous 12 months and 70% expecting no change in the next year.

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