JP Morgan CEO Issues Warning About Inflation

( While attending the World Economic Forum on Thursday, Jamie Dimon, the CEO of J.P. Morgan Chase, said there is “a lot of underlying inflation” going on right now.

As part of an appearance on the “Squawk Box” program on CNBC, Dimon was asked about his views on the economy’s future as well as what he thinks that Jerome Powell, the chairman of the Federal Reserve Bank, might do next.

Dimon replied by saying that most economist prognosticators, which includes the Fed, were completely wrong about U.S. inflation.

As he said:

“I actually think rates are probably going to go higher than 5% … because I think there’s a lot of underlying inflation, which won’t go away so quick.”

Last month, the Federal Reserve once again raised its benchmark interest rate, this time all the way up to a range that falls from 4.25% to 4.50%. That marks the highest that interest rates have been in the last 15 years.

The New York Times reported recently that J.P. Morgan Chase is ultimately expecting that the U.S. will enter a “mild recession” in the near future. To prepare for hat, the firm has reserved $1 billion in cash reserves, since they fully expect borrowers to ultimately fall behind on loan payments.

In the fourth quarter of 2022, the firm reported earnings at $11 billion, which represented a year-over-year increase of 6%.

Dimon explained his approach to the economy in general when he said:

“I know there are going to be recessions, ups and downs. I really don’t spend that much time worrying about it. I do worry that poor public policy damages American growth.”

In mid-December, Powell said that the Fed planned to initiate additional hikes in the interest rate in 2023, even though there are signs that the economy is headed toward a recession. His argument for still raising the interest rates is that Americans would pay a much higher cost if the Fed doesn’t get a solid grip on the current inflation.

Those comments came to reporters after the Fed held its policy-setting committee meeting at which it raised interest rates by another half-percentage point. Powell said the Fed projects that it will increase interest rates to levels above 5% this year.

The Fed chairman told reporters that even though there are signs that inflation is coming under control, he’s not at all confident that the fight is over and has been won.

At the same time, the Fed has projected that the economy will operate very slowly in 2023. It projects the annual growth rate to be only 0.5%, with the unemployment rate sitting about a full point higher by the end of 2023 than it was at the end of 2022.

If that happens, it would rise well higher than what would historically be associated with recession times.

At that December news conference, Powell said:

“We don’t talk about this kind of recession, that kind of recession. We just make these forecasts. I wish there were a completely painless way to restore price stability. There isn’t, and this is the best we can do.”