2023
This quarter's Research & Commentary digs into an important question facing policymakers: whether the constellation of economic indicators have returned close enough to "normal" levels to merit a reconsideration of the monetary policy stance.
In the most recent CFO survey, financial decision-makers shared whether interest rate hikes have caused them to pull back on their spending plans, and for those not yet affected, whether further hikes would impact their firm. Compared to the fourth quarter of last year, a higher percentage of firms reported that interest rates have curtailed capital and non-capital spending plans.
The current outlook of small firms is noticeably worse than for large firms. On average, small firms report being more affected by tight financing conditions, are less optimistic about the economy and their own prospects, and expect lower revenue growth in 2023.
In the first quarter 2023 CFO Survey, an increasing share of firms cited 'unfavorable financing' and a 'lack of funding' as reasons for not engaging in capital investment. This evidence suggests that firms are beginning to feel the effects of higher interest rates as monetary policy continues to tighten.
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