Federal Reserve Chairman Jerome Powell suggested last week that the central bank is getting close to the confidence it needs to cut interest rates.
By Harry Brumpton
Jamie Dimon said he would not take the prospect of a US recession “off the table” but said the Federal Reserve should wait before cutting rates.
“The world is anticipating a soft landing, probably at 70-80%,” said the CEO of JPMorgan Chase & Co. Tuesday via video link at the Australian Financial Review Business Summit in Sydney. “I think the chance of a soft landing in the next two years is half. The worst case would be stagflation.”
Dimon said economic indicators have been distorted by Covid-19 and he takes them with “a grain of salt,” saying the Fed should wait for more clarity before cutting rates.
“They can always make quick and dramatic cuts. Their credibility is somewhat at stake here,” he said. “Unemployment in the United States is currently very low, wages continue to rise.”
Dimon said that while the U.S. economy is currently “booming a little bit,” the risk of a recession remains.
The comments strike a slightly less optimistic tone from the top banker, who recently outlined an upbeat outlook for global markets – a sharp departure from his views less than two years ago, when central banks first started tightening interest rates. Dimon made headlines in 2022 for warning that a “hurricane” was about to hit the US economy.
Fed Chairman Jerome Powell suggested last week that the central bank is getting close to the confidence it needs to cut interest rates.
“We’re waiting until we gain more confidence that inflation is sustainably moving at 2%,” Powell said Thursday while answering questions from the Senate Banking Committee. “If we gain that confidence – and we are not far from it – it will be appropriate to roll back the level of restrictions.”
‘It’s going to be a circus’
On the topic of the US elections, Dimon said it was difficult to predict a winner between Joe Biden and Donald Trump.
‘You have two men: they are both on the older side and neither of them can get sick. It’s nerve-wracking,” he said. “It’s going to be a circus”
Dimon said Trump was a “great political figure” but he is unpredictable.
“I hope Trump is a much more thoughtful, rational and even-tempered speaker when he talks about foreign policy and how he wants to deal with it,” Dimon said.
The banker previously expressed her support for Republican candidate Nikki Haley, who suspended her campaign last week after overwhelming losses in the primaries.
First print: March 12, 2024 | 11:02 PM IST