Jamie Dimon: US bank boss warns interest rates could rise to 8%

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By journalsofus.com

  • By Chris Newlands
  • Business Reporter, BBC News

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The boss of one of the world’s largest banks has warned that US interest rates could rise to 8%.

JPMorgan Chase chief Jamie Dimon said his bank was preparing for a jump in interest rates due to “persistent inflationary pressures.”

Central banks around the world are busy raising rates to curb rising prices.

But with price rises now gradually slowing in some countries, central banks may start lowering interest rates.

In his annual letter to shareholders, Mr Dimon said the bank was prepared for a “very wide range” of rates from 2% to 8% or even higher, which would potentially reflect the need to curb higher government spending and price rises. Has been increased due to. ,

Mr Dimon’s comments come as US interest rates remain between 5.25% and 5.5% – the highest they have been in more than 20 years.

By making borrowing more expensive, higher interest rates encourage saving and reduce borrowing for home buying and business investment, cooling the economy and reducing upward price pressures.

The overwhelming expectation that interest rates will fall in 2024 is what the market is pricing in due to two quarter-point rate cuts by the US Federal Reserve this year.

“All of the following factors appear to be inflationary: ongoing fiscal spending, remilitarization of the world, restructuring of global trade, the capital needs of the new green economy, and possibly higher energy costs,” Mr. Dimon wrote.

The US Federal Reserve will make its next decision on the direction in which interest rates will move at the end of the month.

The expectation is that it will keep rates at current levels and the first cut will likely take place in June. The European Central Bank is also expected to make its first rate cut in June.

However, some analysts on Tuesday questioned whether a US rate cut for the summer was likely.

The latest US inflation data is due to be published on Wednesday, with the CPI measure of inflation expected to rise to 3.4% year-on-year from 3.2% in February and perhaps making it harder to justify a rate cut.

In a speech given at Stanford University in early April, Federal Reserve Chairman Jay Powell said: “If the economy grows broadly as we expect, most Federal Open Market Committee participants will expect to keep the policy rate at… “It would be appropriate to start reducing. Sometime this year.”

Mr. Dimon has been chief executive of JPMorgan Chase since late 2005. A year later he also became chairman and president of the bank. He is the longest serving chief executive of a major investment bank.

In his letter to shareholders, he also said he sees the United States at a “pivotal moment” amid global uncertainty.

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