U.S. bankers' fears that the Federal Reserve will overcorrect on inflation are intensifying.

A recent survey from IntraFi Network LLC found that 61% of bank executives believe the Fed will overcorrect for inflation by raising rates too fast and high, up from 52% when IntraFi asked bankers the same question in April. Comparatively, 21% of respondents said they believe the Fed is on the right track, and 18% believe the Fed may not raise rates fast enough and high enough to rein in inflation, according to the results.

IntraFi distributed the survey to U.S. bank executives via email between June 21 and June 30, and 388 bank CEOs, presidents, CFOs and COOs responded.

The survey also found that bankers think a recession is likely, with 48% of respondents believing the U.S. economy will fall into a recession by the end of the year and another 48% believing the U.S. economy will fall into a recession sometime in 2023. Just 4% do not foresee a recession in the near future.

The majority of respondents attributed their recession fears to monetary policy, with 52% responding that a recession is likely to occur because of an overcorrection by the Fed. Another 25% of respondents believe a recession is likely to occur because of ongoing supply chain issues.

Similarly, 57% of bankers responded that they believe overall economic conditions will be moderately worse 12 months from now. Another 9% believe economic conditions will be significantly worse one year from now.

Fear of an overcorrection by the Fed, the potential for a recession and worsening economic conditions may be clouding banks' loan demand outlook, as 44% of bankers believe loan demand will moderately decrease 12 months from now.

Talent troubles

Bankers are also grappling with talent and compensation pressures. The IntraFi survey found that 60% of respondents are having difficulty finding employees who are qualified for open positions.

To solve for those pressures, 66% of the banks that responded have increased their compensation in order to retain and attract qualified employees. But the majority of bankers are not open to remote work options to solve for talent pressures, with 59% of respondents saying remote work is not a viable option for their open positions.