CFO Surveys Flag Borrowing Costs as Fed Hike Reshapes Spending

Finance chiefs see the bill for higher rates arriving

American finance chiefs are feeling better about the future, but they are planning around higher interest rates. Two major CFO surveys published within a week of each other in late September show the same thing. Executives are more upbeat about the economy and their own companies. At the same time, high borrowing costs have climbed their list of worries, and cutting costs is still the most common priority, though not by much.

The timing matters. On September 16–17, the Federal Reserve raised its benchmark rate by a quarter point, to a range of 3.75% to 4.0%4. It was the Fed's first hike in three years, and it came after core PCE inflation ran above 3% in every month of 20264. Fed Chair Kevin Warsh defended the move by saying inflation had been too high for too long3. The Fed's own projections pointed to one more hike this year before holding steady in 20273.

For CFOs, the debate over whether rates would keep falling is over. The question now is how much more expensive money will get, and which companies will be hurt most.

What the surveys found

The U.S. Bank CFO Insights Report for fall 2026 polled 1,000 senior finance leaders between August 5 and 26. All of them work at companies with at least $100 million in annual revenue12. Cutting costs remained the top priority at 37%, but revenue growth nearly caught up at 35%12. Six months earlier, cost-cutting stood at 39% and revenue growth at 31%19. On risks, high borrowing costs were named by 35% of respondents, up from 31% in the spring. That moved them into second place behind geopolitical tension and war at 38%, and ahead of inflation at 34%19.

The quarterly CFO Survey, run by Duke University's Fuqua School of Business and the Richmond and Atlanta Fed banks, tells a similar story. It reflects responses from 517 financial executives surveyed from August 17 to September 427. Monetary policy became the most-cited concern, ranked first by about 20% of firms, up from under 15% the previous quarter22. That shift happened as the Fed debate moved toward hikes, and before the hike itself26.

On the headline mood, the two surveys broadly agree. U.S. Bank found that 68% of finance leaders now hold a positive three-year view of the U.S. economy, up from 58%. It also found that 71% are upbeat about their own company's three-year prospects, up from 64%12. The Duke/Fed survey put average CFO optimism about the economy at 60.3 out of 100, roughly flat from the prior quarter23. It also found that respondents' estimated odds of negative growth over the next year fell to 10.7% from 11.6%23.

Where the readings diverge: who carries the cost

The surveys look at different companies, and that changes the picture. The U.S. Bank sample includes only companies with at least $100 million in revenue, and 30% of them bring in $2 billion or more12. The Duke/Fed survey covers firms of all sizes26. That is where the stress shows up.

The Duke/Fed results show rising optimism at large companies being partly cancelled out by falling optimism at small and financially constrained firms23. One-fifth of small firms said financial constraints kept them from covering costs or chasing new business, compared with about 10% of large firms27. Among firms not planning to invest, about 42% blamed poor financing conditions or a need to hold on to cash, up from 32% six months earlier26. Firms overall also expect less capital spending over the next six months than they did half a year ago22.

A PYMNTS Intelligence survey of 60 mid-market CFOs, at companies with $100 million to $1 billion in revenue, shows how quickly budgets shrink when uncertainty rises. In that situation, 58% said they would cut or delay capital projects, while only 7% would trim maintenance spending5. Hiring and marketing also tend to be cut early5. In the same survey, 22% named interest rates and financing costs as the biggest source of uncertainty behind investment decisions, second only to customer demand5.

The pattern across these surveys is fairly clear. Large companies can afford higher rates and are starting to think about growth and acquisitions again. Smaller companies are getting squeezed. U.S. Bank found that exploring M&A had jumped from the fifth-ranked priority into the top three, and 57% of respondents said they were more likely to make an acquisition than a year ago, up from 49%1219. That kind of dealmaking requires a strong balance sheet, which smaller firms in the Duke/Fed sample increasingly say they don't have.

Cost-cutting without cutting jobs

CFOs are mostly not trying to save money by cutting staff. In the U.S. Bank survey, 72% said they are investing in productivity through AI and automation to deal with inflation, while reducing headcount came last of nine options at 28%12. Richmond Fed President Tom Barkin has described something similar. He said companies are slow to hire because of productivity gains, the potential of AI, and general caution, rather than cutting workers outright25.

The problem is that technology spending is itself becoming a cost to manage. More than half of U.S. Bank respondents, 51%, said their AI spending went over budget in the past year, even though 69% said economy-wide AI investment is opening up commercial opportunities for them18. Bill Mulvihill, U.S. Bank's head of loan capital markets, said companies are being hit from two sides. They pay for AI directly, and they also face higher prices caused by the huge build-out of data centers11. He expects companies to look harder at whether each AI project is worth the money11.

This links to the inflation problem the Fed is trying to fix. Chicago Fed President Austan Goolsbee has said heavy AI investment may be adding to demand beyond what the economy can absorb. If demand is overheating, he argued, the Fed's response should be more aggressive and come sooner6.

Prices up, and rates following

CFOs are not just absorbing higher costs. They are passing them on. In the Duke/Fed survey, finance chiefs expect to raise prices an average of 5.3% this year, up from 3.6% expected at the start of 2026. They expect 4.5% increases next year22. A separate Richmond Fed survey of businesses found that 20% of firms now adjust prices at least monthly, up from 14% before the pandemic. It also found that 83% of firms that responded have adopted other pricing tactics, such as customer-specific or inflation-linked pricing21.

This is the loop the central bank is worried about. Barkin has said companies today find less pushback when they raise prices than they did before the pandemic25. That helps explain why the Fed moved even while business sentiment was firm. It also means CFO price plans are part of why rates are rising, not just a reaction to it.

Forecasts beyond this year are uncertain. J.P. Morgan's chief U.S. economist Michael Feroli said he does not expect a long hiking cycle, because inflation still looks driven by supply shocks4. Goolsbee's warning about overheating demand points toward a more aggressive path6.

The long end matters too

Companies borrow mostly at longer maturities, not at the Fed's overnight rate. The 10-year Treasury yield was around 5.26% in early October, as government bond turmoil in the U.S. and France pushed sovereign borrowing costs higher across Western economies2. Anthony Gutman, co-CEO of Goldman Sachs International, said governments need smaller deficits and stronger growth to bring yields down2. Bridgewater founder Ray Dalio has warned that rising interest costs are crowding out spending across the economy7.

The takeaway

The surveys show more than a simple swing between gloom and confidence. Large companies have grown used to uncertainty. As Mulvihill put it, firms are "learning to live with" it11. Those companies are moving money toward growth, acquisitions and automation while keeping a close eye on costs.

Smaller and more heavily borrowed firms are doing the opposite. They are holding onto cash, delaying investment and cutting discretionary spending as financing gets more expensive. If the Fed hikes again as its projections suggest, that gap between large and small companies, rather than overall CFO sentiment, will probably be the clearest sign of whether tighter policy is slowing business activity.