Bankers Betting Interest Rates Will Peak in First Half of 2023

Source: American Banker

In the eyes of bankers, the U.S. is about three to nine months from seeing its highest interest rates in more than 15 years and perhaps even closer to an economic slowdown.

Almost two-thirds of banking executives think the federal funds rate will peak in the first half of 2023, according to an IntraFi Network survey of more than 450 bank executives released Tuesday. Close to 60% of banking leaders expressed concern that the Federal Reserve will raise rates too quickly in its bid to tame inflation. 

Those fears have created a consensus that a recession is on the horizon. About 52% of bank executives believe the U.S. economy has already entered a recession or will do so by the end of the year. That could mean trouble for bank profits, which often soar and fall alongside the economy. Executives said they anticipate both higher funding costs and depressed loan demand a year from now, when a recession may be in full swing.

"Most concerns about an upcoming recession are really built around inflation and interest rates, and this survey really confirms that," said Paul Weinstein, senior policy advisor at IntraFi Network.