“For the first time in decades, inflation is having a significant impact on actual compensation results”

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Wall Street traders could see bonuses for 2022 drop by up to 40% as initial public offerings and underwriting activity continue to slow.

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That’s according to the latest projections from Alan Johnson, chief executive of compensation consultancy Johnson Associates Inc. This year’s unique inflation levels will also weigh on wages, Johnson said in a report Thursday.

“For the first time in decades, inflation is having a meaningful impact on actual compensation outcomes,” he said.

Rising interest rates and the resulting increase in borrowing costs are hampering transactions, while volatility has undermined the equity subscription market. As a result, Johnson predicted that traders would see bonuses drop by as much as 20%, and underwriters could see drops as large as 40%.

Traders, on the other hand, feasted on the volatility, which supported volume and helped earnings at Wall Street’s biggest banks. Equity traders could see their incentive compensation increase by up to 10%, while fixed income traders could see jumps as high as 20%.