CFO Slice

A Federal Reserve survey of more than 500 U.S. chief financial officers found that most companies have largely absorbed the recent oil price spike linked to the U.S.-backed conflict with Iran, with limited impact on customer demand and only modest price increases passed on to consumers. The quarterly survey, conducted by the Federal Reserve Banks of Richmond and Atlanta and Duke University, showed CFOs lowered their U.S. economic growth forecast to 1.8% from 2.1%, although optimism about their own businesses improved and hiring plans remained steady. While two-thirds of respondents reported higher production costs due to rising energy prices, only one-third said they increased prices. More than 70% said demand for their products and services was largely unchanged or had increased, suggesting the broader economic impact of the oil shock has been limited. Companies expect costs and prices to rise by around 4.7% this year, although those forecasts were based on oil prices near $90 per barrel. With oil prices falling following a ceasefire and the reopening of shipping routes through the Strait of Hormuz, Federal Reserve researchers said inflationary pressure from energy could ease if prices remain lower. The survey comes as policymakers continue to monitor persistent inflation, particularly in services, with markets increasingly expecting the Federal Reserve to consider raising interest rates later this year if price pressures remain elevated.