Jamie Dimon sounds alarm over ‘persistent’ inflation, Fed policy

CEO of JPMorgan Chase jamie dimon On Friday, he warned that several headwinds, including chronic inflation, Federal Reserve policy and ongoing wars, pose major threats to the U.S. economy.

“Many economic indicators remain positive,” the CEO of the largest U.S. bank said in a release announcing first-quarter results. “However, as we look to the future, we remain vigilant against a number of significant uncertain forces.”

These risks include not only worsening geopolitical tensions, but also an “unstable” global situation, including “horrible wars and violence” that cause suffering.

Dimon also warned of “a number of persistent inflationary pressures” that could persist. Inflation has fallen significantly from its peak of 9.1%, but progress since the summer has been roughly flat.

Why are groceries still so expensive?

JPMorgan Chase CEO Jamie Dimon attends a hearing on oversight of Wall Street companies before the Senate Banking, Housing and Urban Affairs Committee on December 6, 2023 in Washington, DC. . (Aaron Schwartz/Via Xinhua/Getty Images)

Latest consumer price index datathe report, released Wednesday morning, further heightened Wall Street’s concerns about the inflation situation.

According to the report, inflation rose 3.5% in March, the highest level since September 2023, due to soaring gas and rent prices. Inflation was higher than expected for the third month in a row, underscoring the difficulty of containing price increases.

ticker safety last change change %
J.P.M. JPMorgan Chase & Co. 186.05 -9.19 -4.71%

Other parts of the report also point to stubborn price pressures within the economy. Core prices, which exclude more volatile food and energy measures, rose 0.4% in January and February, as they did in January and February, and rose 3.8% for the year. These numbers are also higher than expected.

US economy adds 303,000 jobs in March, bigger than expected

Ministry of Finance building

Pedestrians near the U.S. Treasury Building on December 30, 2022 in Washington, DC. (Ting Sheng/via Bloomberg/Getty Images)

Finally, Mr. Dimon said, federal reserve The long-term impact of a campaign to reduce assets held on its $7.5 trillion balance sheet is still unclear, he said.

“We have never truly experienced the full effects of quantitative tightening on this scale,” he said.

Mr. Dimon’s comments are as follows: federal reserve Policymakers are considering when to start cutting interest rates, amid concerns that progress in improving inflation is stalling. Investors have been steadily lowering their expectations as central bankers suggest there is no need to rush to cut rates and that upcoming economic data will guide decisions.

Higher interest rates drive up interest rates on consumer and business loans, forcing employers to cut spending and slowing the economy. Rising interest rates have pushed the average interest rate on a 30-year mortgage above 8% for the first time in decades. Borrowing costs for everything from home equity lines of credit to auto loans and credit cards have also skyrocketed.

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SP500 S&P500 5157.23 -41.83 -0.80%

But the rapid rise in interest rates hasn’t stopped consumers from spending and businesses from hiring, raising hopes on Wall Street that the U.S. economy can avoid recession. Additionally, the S&P 500, the broadest measure of the U.S. stock market, is at an all-time high.

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But Dimon sounded more skeptical about the possibility of a soft landing earlier this week.

“These markets appear to be pricing in a 70-80% chance of a soft landing of moderate growth with lower inflation and lower interest rates,” he wrote in a book on Monday. Annual letter to shareholders. “I think the odds are much lower than that.”