JPMorgan CEO Jamie Dimon has stated that the Federal Reserve should hit a pause on hiking interest rates. Although the market has already dealt with several big increases, there is a possibility that the authority is going to raise a little more from here.[0] Dimon noted that the Federal Reserve has elevated benchmark rates at the fastest pace in history, from near-zero levels to upwards of 5%, and that the Fed is “right to pause at this point” after 500 basis points worth of hikes, but he also said it’s “possible they’re going to raise a little bit more.” Dimon warned investors to be prepared for perhaps a less smooth ride as the Federal Reserve may not be done with interest rate increases just yet. He added that people should also be a little prepared for the volatility which might be created by quantitative tightening.
Despite the Fed’s aggressive efforts to slow down the rate of price pressures, inflation still remains above the central bank target of 2%. According to the most recent reading of the Consumer Price Index, inflation increased by 4.9% in April, which was slightly lower than the predicted 5.0%.[1] Given the stubbornness of inflation, Dimon said that the central bank would be right to pause, but they are likely to keep raising rates.[2] He mentioned that inflation is kind of stickier and that people are coming around to that, which means rates may have to go up a little more.[1]
Dimon is among several market thinkers who are bearish about the US economy. He’s previously warned of a looming recession sparked by a US credit crunch. He said that turmoil in the banking industry will cause repercussions for years to come.
JPMorgan is expanding into the Japanese and Australian markets to take advantage of growth potential.[3] However, the bank’s China expansion is taking longer than expected.[4] JPMorgan’s China head said that the US bank races to take advantage of China’s $60tn financial sector.[4] Dimon mentioned that over time, “there will be less trade” between China and the United States. He predicted that it’ll take years for this thing to take place and that it’s not de-coupling, but it’s de-risking.[5]
Dimon is attending the bank’s annual Global China Summit in Shanghai and was asked if he would ever consider running for public office or accept a cabinet position.[6] He said that pursuing a political career has crossed his mind amid speculation about what might come next for him. Although he added that he is happy where he is now, he thinks that JPMorgan does a great job of helping Americans and countries around the world, and this is his job.[6]
In summary, Dimon believes that the Federal Reserve should pause its interest rate hikes, but there’s a chance it could continue to hike a little more. He warned investors to be prepared for perhaps a less smooth ride and for the volatility which might be created by quantitative tightening. Although the Fed has taken strong measures to decelerate the pace of inflation, it persists above the central bank’s goal of 2%. Dimon is among several market thinkers who are bearish about the US economy, and he warned of a looming recession sparked by a US credit crunch. He believes that over time, there will be less trade between China and the United States, and that the world has changed a little bit.
0. “JPMorgan CEO Hints More Fed Rate Hike Amid Debt Ceiling Crisis” CoinGape, 31 May. 2023, https://coingape.com/people-should-prepare-for-more-fed-rate-hikes-jpmorgan-ceo/
1. “Prepare for higher interest rates as US inflation stays stubborn, JPMorgan CEO Jamie Dimon says” Business Insider India, 31 May. 2023, https://www.businessinsider.in/stock-market/news/prepare-for-higher-interest-rates-as-us-inflation-stays-stubborn-jpmorgan-ceo-jamie-dimon-says/articleshow/100652711.cms
2. “Dimon: Brace for higher interest rates as US inflation stays stubborn” Markets Insider, 31 May. 2023, https://markets.businessinsider.com/news/stocks/jamie-dimon-brace-for-interest-rate-hikes-us-inflation-2023-5
3. “JPMorgan Says China Growth Takes Longer, Eyes Japan Market (1)” Bloomberg Law, 31 May. 2023, https://news.bloomberglaw.com/banking-law/jpmorgan-china-ceo-says-expansion-taking-longer-than-expected
4. “JPMorgan China CEO Says Expansion Taking Longer Than Expected” Caixin Global, 31 May. 2023, https://www.caixinglobal.com/2023-05-31/jpmorgan-china-ceo-says-expansion-taking-longer-than-expected-102060562.html
5. “Jamie Dimon comments on JPMorgan’s business in China (NYSE:JPM)” Seeking Alpha, 31 May. 2023, https://seekingalpha.com/news/3976118-jamie-dimon-comments-on-jpmorgans-business-in-china
6. “JPMorgan’s Dimon hints at public office run ‘one day,’ warns of more rate hikes” MarketWatch, 31 May. 2023, https://www.marketwatch.com/story/jamie-dimon-for-president-jpmorgan-boss-hints-at-public-office-run-one-day-warns-of-more-rate-hikes-967a40e7