CFOs Expect Higher Inflation as Monetary Policy Concerns Grow

Financial officers at US companies expect higher inflation this year and next, according to a new survey by the Federal Reserve. The quarterly poll of around 500 firms showed that CFOs anticipate an average price increase of 5.3% this year, up from 4.6% in the previous quarter and 3.6% at the start of the year. For next year, they expect prices to rise by an average of 4.5%, slightly higher than their forecast for the current quarter.

The survey was conducted from August 17 to September 4, before the Federal Reserve's latest interest rate hike. While inflation remains a concern, 'monetary policy' has become the most cited issue among finance chiefs, with around 20% of firms putting it at the top of their list of concerns.

Vice President and economist Sonya Waddell noted that financing constraints are particularly pronounced for small and financially constrained firms. About a fifth of these businesses said they were holding back expansion plans or struggling to cover costs due to unfavorable financing conditions.