CFOs plan 5.3% price hikes — and now fear the Fed more than inflation

The executives who set America's prices are planning the biggest increases of the year — and their biggest worry is no longer inflation. It's the Federal Reserve.

America's price-setters just told the Federal Reserve its inflation problem is getting worse. Chief financial officers are planning the biggest price increases of the year — and what worries them most is no longer inflation itself, but the central bank's response to it.

Chief financial officers at around 500 U.S. firms told the Fed's quarterly survey they expect to raise prices an average of 5.3% this year, up from roughly 4.6% in the second quarter and 3.6% at the start of 2026. For next year, they see 4.5% increases, versus 4.1% and 3.6% on the same comparison. The survey is conducted by the Richmond and Atlanta Federal Reserve banks with Duke University's Fuqua School of Business.

The tell: CFOs now fear the Fed's response more than inflation

Here's the tell: even as their own pricing plans got more aggressive, CFOs pushed inflation down their list of worries. 'Monetary policy' took its place as the most-cited top concern, named by about 20% of firms compared with less than 15% in the last survey. That's the corporate sector reading its own handwriting — executives know their price hikes are part of the reason the Fed is reaching for higher rates.

The timing sharpens the point. The survey ran from August 17 to September 4 — before the Fed's quarter-point hike last week to a 3.75%–4% range, but as the policy debate was already shifting toward more increases. CFOs were marking up their 2026 pricing plans while the Fed was still deciding how hard to push back.

Small firms feel the squeeze first

The pain isn't evenly spread. 'Where there are challenges they are most pronounced for small and financially constrained firms,' said Sonya Waddell, a vice president and economist at the Richmond Fed. About a fifth of small firms said financing constraints were holding back expansion plans or making it hard to cover costs, and firms overall expect less capital investment over the next six months than they did six months ago.

Among companies not planning to invest, 42% blamed unfavorable financing conditions or the need to preserve cash — up from 32% six months ago. That sits uneasily beside Fed officials' view that current financial conditions are not restrictive. The executives signing the checks disagree, at least at the smaller end of the economy.

A hawkish backdrop: hot PMI, Barr, and the 10-year

The survey landed on a day full of reasons for the Fed to stay hawkish. S&P Global's flash PMI showed U.S. business activity at a five-year high with input costs at their highest since October 2022, and Fed Governor Michael Barr said 'further policy adjustments are likely to be needed' to return inflation to target. The CFOs' pricing plans and the PMI's price gauges are telling the same story from opposite ends of the economy.

What comes next: the earnings-season test

What comes next is the earnings-season test: whether companies actually realize these planned increases — and whether the Fed, watching the same numbers, decides the price-stability half of its mandate needs more force. The central bank's own projections have 16 of 18 officials expecting at least one more rate hike before the end of the year. For everyone else, the practical translation is simpler: the people who set prices are planning to charge more, and the Fed's answer will show up in borrowing costs first.

What CFOs are, and why their price plans matter, in plain English

A CFO — a chief financial officer — is the executive who signs off on a company's budgets, borrowing, and pricing. When CFOs across the economy say they plan to raise prices 5.3%, that matters because expectations can become self-fulfilling: if every company plans bigger increases, suppliers, landlords, and workers all start assuming higher inflation, and it tends to arrive.

Why would CFOs fear 'monetary policy' more than inflation itself? Because the Fed fights inflation by raising interest rates, and higher rates make borrowing more expensive — for the company's own loans, its customers' mortgages, and the investment projects that drive growth. CFOs are saying the cure now worries them more than the disease.

The expectations channel: what 5.3% against a 2% target means

The CFO Survey is one of the better-regarded expectations series precisely because it asks the people with pricing power, not consumers or economists. The Richmond and Atlanta Feds and Duke's Fuqua School poll roughly 500 firms quarterly across sizes and sectors — and the expectations channel is why the Fed watches it: when price-setters expect 5.3% against a 2% target, the gap itself becomes a policy problem.

Note the sequencing the survey captures. Expected 2026 price growth has risen in every quarterly read this year — 3.6% to ~4.6% to 5.3% — while the 'monetary policy' concern only jumped now. That ordering suggests CFOs spent the year passing through costs and only recently started pricing the Fed's reaction function. It's a lagging admission of a leading indicator.

The distributional detail is the most underpriced part of the release. The Fed's leadership says financial conditions aren't restrictive in aggregate; the survey says a fifth of small firms are already constrained and the share of non-investors blaming financing jumped ten points in six months. Policy made on aggregates lands on distributions — and the distribution is starting to flinch.