JPMorgan CEO: Inflation May Be Stickier Than People Think, Fed May Raise Rates Further

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The CEO of JPMorgan Chase, Jamie Dimon, has warned that inflation may be more persistent than many expect, and the government’s fiscal and monetary stimulus in the past several years has been greater than many realize. Dimon also expects more interest rate hikes from the Fed, stating: “I suspect that they may not be done … I just think there’s a higher chance than probably other people think.”

Jamie Dimon Shares Economic Outlook

JPMorgan Chase CEO Jamie Dimon discussed the U.S. economic outlook in an interview with Yahoo Finance Live on Wednesday after Fed officials wrapped up their Federal Open Market Committee (FOMC) meeting.

The committee decided to pause raising interest rates this month, keeping the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. Regarding the FOMC decision, Dimon said: “I think they’re right to pause here and see what happens.” However, the JPMorgan executive believes that the central bank may raise interest rates further, stating:

I suspect that they may not be done.

While emphasizing that he is not making a prediction about the magnitude of future rate hikes, Dimon stated that the Federal Reserve could raise interest rates by 25, 50, or even 75 basis points more. “I just think there’s a higher chance than probably other people think,” he stressed.

The Fed explained in a statement issued after the FOMC meeting: “Recent indicators suggest that economic activity expanded at a strong pace in the third quarter … The U.S. banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The committee remains highly attentive to inflation risks.”

Commenting on the Fed’s statement, the JPMorgan chief said:

I think there’s a chance that inflation is just a little stickier than people think and their fiscal and monetary stimulus in the last several years is more than people think. Unemployment is very low. We’ll see.

In September, Dimon warned that the Fed could raise interest rates to 7%, potentially pushing the U.S. economy into stagflation. In October, he revealed that he sees two “extraordinary” storm clouds hitting the U.S. economy. “One is the fiscal money being spent is so big, the largest in peacetime ever — America and kind of around the world — with very high deficits and QT we’ve never had,” the executive detailed, noting that “The biggest storm cloud is geopolitical.” He also warned of “the most dangerous time the world has seen in decades.”

Do you agree with JPMorgan CEO Jamie Dimon about the U.S. economy, inflation, and future Fed rate hikes? Let us know in the comments section below.