The overwhelming majority of company bosses fear surging inflation will proceed to hamper the US financial system this yr even when the feds take aggressive motion to handle the issue, in keeping with a survey of CEOs revealed this week.
Almost 75% of CEOs polled by the Conference Board mentioned the Federal Reserve’s expected move to hike interest rates a number of instances this yr was unlikely to rapidly cool inflation – which surged to a recent four-decade high of 7.5% in January.
The grim inflation outlook will result in extra ache for American customers. Some 27% of CEOs count on to boost costs inside the subsequent six months to handle greater labor and transportation prices, whereas 45% plan to go alongside prices inside the subsequent six to 12 months.
“CEOs are getting ready for provide constraints and wage inflation to persist properly into this yr and doubtlessly past,” mentioned Roger W. Ferguson, Jr., a Convention board trustee and former Fed vice chair.
“Whereas interest-rate hikes ought to assist dampen inflation, few expect costs to stabilize quickly. Because of this, a overwhelming majority of CEOs nonetheless foresee a have to go alongside rising prices to shoppers over the subsequent 12 months,” Ferguson added.
The 7.5% soar in January’s Shopper Value Index – a key inflation gauge – was much more than economists anticipated and indicative of the problem the Federal Reserve faces within the coming months.
The central financial institution has signaled a charge hike in March, with a number of extra anticipated all year long because the Fed makes an attempt to stop inflation from turning into entrenched.
A number of main corporations, including McDonald’s and Starbucks, have already raised costs to offset their greater prices. Companies are contending with provide chain disruptions, a nationwide labor scarcity and rampant transport delays.
The Convention Board’s CEO Confidence index fell by eight factors to 57 within the first quarter of 2022, marking the third straight quarterly decline. Simply half of CEOs mentioned they count on the financial outlook to enhance over the subsequent six months, down from 61% who had a optimistic view the earlier month.
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