# CFOs brace for higher borrowing costs after midterms > Democrats control Congress, but finance chiefs face sustained pressure on rates regardless of politics. Here's what they should do now. - Title: CFOs brace for higher borrowing costs after midterms · Fortune - Summary: Democrats control Congress, but finance chiefs face sustained pressure on rates regardless of politics. Here's what they should do now. Finance chiefs should… - Keywords: cfos, borrowing costs, capital allocation, debt management, fiscal uncertainty, ai investment, data centers, political gridlock, credit markets, Fortune - Source: Fortune — https://fortune.com/2026/11/04/midterms-wont-ease-borrowing-costs-heres-what-cfo-should-do-now - Author: Sheryl Estrada - Read time: 2 min - Topics: cfos, borrowing costs, capital allocation, debt management, fiscal uncertainty, ai investment, data centers, political gridlock, credit markets ## Democrats win Congress, but rates stay high Democrats won control of both chambers in the midterms. Companies could face greater scrutiny of AI investment and data center development, but broader financing challenges extend beyond politics. ## Expect sustained higher borrowing costs CFOs should go into 2027 expecting sustained higher borrowing costs, according to Josh Putnam, EY-Parthenon's global and Americas corporate finance leader. Financing conditions are likely to remain volatile regardless of which party controls Congress. > CFOs should go into 2027 expecting sustained higher borrowing costs. ## What's driving pressure on rates Growing deficits, strong capital demand, inflation volatility, and policy uncertainty are putting pressure on long-term rates. This makes disciplined capital allocation, debt management, and investment decisions increasingly important for finance chiefs. ## Three steps CFOs should take now Stress-test investment hurdles, evaluate debt maturities, and protect balance-sheet flexibility. Companies must understand which investments can generate returns above their cost of capital and redirect resources when they cannot. ## Political gridlock adds fiscal risk A divided government would not automatically push term premiums higher, said Gregory Daco, EY-Parthenon's chief economist. But repeated budget disagreements, shutdown risks, debt ceiling stress, and greater fiscal uncertainty would reinforce upward pressure. ## Short-term borrowing faces new risks Political uncertainty can affect access to credit and the cost of short-term financing.Markets respond to uncertainty by charging more, whether the risk originates in Washington, D.C. > Markets respond to uncertainty by charging more, whether the risk originates in Washington, D.C., or on Wall Street. ## Banks tighten credit when risk rises Banks react to elevated risk by tightening credit terms and reducing lending.Legislative gridlock can create volatile funding cycles and cause short-term borrowing costs to spike. ## AI investment faces political scrutiny Voters sent a clear message about the AI buildout: the costs of data centers are now a political issue. ## AI financing costs will rise Growing regulatory and political uncertainty facing AI and data center developers could drive up costs and complicate project financing. ## Return to corporate finance basics Mark Williams recommends returning to corporate finance fundamentals, including more conservative net present value assumptions, multi-variable scenario analysis, and stress testing against higher borrowing costs and stricter lending covenants. ## Pair AI investment with worker investment CFOs should prioritize AI projects with measurable productivity gains, account fully for power and infrastructure costs, and pair technology investment with investment in workers and skills. ## Key takeaway Finance chiefs should expect sustained higher borrowing costs in 2027 and stress-test investments against volatile financing conditions, regardless of which party controls Congress.