Banks and consumers alike are grappling with the impact of persistently high inflation and tighter monetary policy. The Federal Reserve, in a battle to tame inflation, raised interest rates seven times in 2022, and has indicated that it will enact additional rate increases in 2023. The hope, of course, is that the Fed’s moves will result in a so-called “soft landing”—meaning the economy slows enough that consumer prices come down, without dipping into a recession. Some of the U.S.’s biggest banks don’t see that as the most likely case, however.

The latest data suggest that higher interest rates are finally putting a dent in inflation—after it had accelerated 9.1% last June, its fastest pace in four decades. In December, U.S. consumer prices rose at an annual rate of 6.5%, marking the sixth straight month that the pace had slowed. But it’s still a long way down to the Fed’s goal for an inflation rate of 2%.

Fed Chair Jerome Powell himself has acknowledged that some economic pain could be coming as a result of the central bank’s measures to bring inflation back to its target.

“Reducing inflation is likely to require a sustained period of below-trend growth and some softening of labor market conditions,” Powell said last month during a news conference, after the Fed had raised its policy interest rate to between 4.25% and 4.5%. “We will stay the course until the job is done.”

How the economy fares—and how bad a slowdown could get—as the Fed continues to focus on its inflation mission, for now, remains up for debate.

Here’s what the biggest U.S. banks have had to say:

JPMorgan Chase

On Friday, JPMorgan Chase (ticker: JPM) projected a “mild” recession in the U.S. this year. Days earlier, CEO Jamie Dimon had walked back his widely discussed prediction from last summer that an “economic hurricane” was coming,

“The U.S. economy currently remains strong, with consumers still spending excess cash and businesses healthy,” CEO Jamie Dimon said in the bank’s earnings release Friday. “However, we still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher, and the unprecedented quantitative tightening.”

The bank also included a $1.4 billion net reserve build, for soured loans, which was “was driven by updates to the firm’s macroeconomic outlook which now reflects a mild recession in the central case,” JPMorgan CFO Jeremy Barnum said on the earnings call. Other banking giants have made similar decisions to plan for the future.

Bank of America

Bank of America

(BAC) during its conference call Friday after posting a fourth-quarter revenue beat, also noted the possibility of “a mild recession.”

The bank also built up its net reserves in the fourth quarter, to $403 million, compared with a net reserve release of $851 million in the year-ago period.

“Our [reserve-setting] scenario, our baseline scenario, contemplates a mild recession,” BofA CEO Brian Moynihan said on Friday’s earnings call, according to a transcript. “That’s the base case of the economic assumptions in the blue chip and other methods we use. But we also add to that a downside scenario, and what this results is in 95% of our reserve methodology is weighted towards a recessionary environment in 2023.”

Citigroup

Citigroup

(C) was also in the chorus of those calling for a mild recession when it reported earnings on Friday. The bank similarly boosted its reserves for credit losses, to $640 million, compared with a release of $1.37 billion a year earlier.

CEO Jane Fraser noted that year was off to a stronger start than expected, but also sees that changing over the course of 2023.

“As we enter 2023, the environment is a tad better than we all expected, for the time being at least, despite the aggressive tightening by central banks,” she said on Friday’s earnings call, according to a transcript, adding that the U.S. labor market remains strong.

However, “the Fed remains resolute in tackling core inflation,” she later added. “Therefore we continue to see the U.S. entering into a mild recession in the second half of the year.”

Her remarks were consistent with ones made last month at the Goldman Sachs U.S. Financial Services Conference, when Fraser said she likely anticipated a recession “sometime in the second half of next year.”

“But all else being equal, and that means no one does anything nutty on the geopolitical front, that then looks like a fairly moderate one because banks are in good shape, corporates are very healthy, consumers are healthy,” Fraser added at the time.

Wells Fargo

Wells Fargo

(WFC) posted a fourth-quarter earnings beat on Friday, and CEO Charlie Scharf was upbeat about the bank’s future while discussing results. Though the bank didn’t predict a recession, Scharf made it clear that it has taken steps to prepare for a slowdown and was remaining vigilant.

“While we are not predicting a severe downturn, we must be prepared for one, and we are stronger company today than one and two years ago,” he said on Friday’s earnings call, according to a transcript via FactSet. “Our margins are wider, our returns are higher, we’re better managed, and our capital position is strong, so we feel prepared for a downside scenario if we see broader deterioration than we currently see or predict.”

He added that the bank was monitoring the impact of higher interest rates on its customers.

The bank also beefed up its provisions for credit losses in the fourth quarter to $957 million, compared with a release of $452 million in the year-ago quarter.

Goldman Sachs

Goldman Sachs

is set to report earnings on Tuesday. On Friday, the bank said it has lost $3 billion since 2020 in its foray into consumer and transaction banking. Last week, it announced job cuts of more than 3,000, Bloomberg reported. The cuts were due to a slowdown in business, losses from challenges of entering retail banking, and overall market uncertainty, according to the report. Investors will certainly be watching what the bank has to say about the economy when it reports financial results.

Write to Emily Dattilo at [email protected]