Jamie Dimon mentioned he wouldn’t take the prospect of a recession within the US “off the table,” however that the Federal Reserve ought to wait earlier than it cuts rates of interest.
“The world is pricing in a soft landing, at probably 70-80%,” the JPMorgan Chase & Co. chief government officer mentioned by way of video hyperlink on the Australian Monetary Assessment Enterprise Summit in Sydney on Tuesday. “I think the chance of a soft landing in the next year or two is half that. The worst case would be stagflation.”
Dimon mentioned financial indicators have been distorted by Covid-19 and he takes them with “a grain of salt,” saying the Fed ought to anticipate extra readability earlier than decreasing rates of interest.
“They can always cut quickly and dramatically. Their credibility is a bit at stake here,” he mentioned. “Unemployment in the United States is very low at the moment, wages continue to go up.”
Dimon mentioned whereas the US financial system was “kind of booming” presently, the danger of a recession remained.
The feedback strike a barely much less optimistic tone from the highest banker, who has lately painted a sanguine outlook for world markets — a pointy divergence from his views lower than two years in the past when central banks first began tightening rates of interest. Dimon made headlines for warning in 2022 {that a} “hurricane” was about to hit the US financial system.
Learn Extra: Dimon Says CRE Will ‘Muddle Through’ as Lengthy as No Recession
Federal Reserve Chair Jerome Powell final week recommended the central financial institution is getting shut to the boldness it wants to start out decreasing rates of interest.
“We’re waiting to become more confident that inflation is moving sustainably at 2%,” Powell mentioned Thursday whereas answering questions from the Senate Banking Committee. “When we do get that confidence — and we’re not far from it — it’ll be appropriate to begin to dial back the level of restriction.”