JPMorgan Chase CEO Jamie Dimon: Will not rule out the possibility of stagflation, which is the worst outcome
Although from the perspective of the U.S. bond market, investors even expect that U.S. inflation may fall below the Federal Reserve's target, Damon does not think so. He is concerned that a series of factors driving inflation, such as increasing deficits and infrastructure spending, will continue to put pressure on the U.S. economy, which is still coping with the impact of interest rate hikes
JPMorgan Chase CEO Jamie Dimon said on Tuesday that even though he has recently become more confident that U.S. inflation will fall from its high levels, he does not rule out the possibility of stagflation in the future.
Dimon stated at the Institutional Investors Committee's autumn meeting:
I think the worst outcome is stagflation - economic recession, rising inflation. By the way, I do not rule out this possibility.
Dimon expressed concerns that factors such as increasing deficits and infrastructure spending that are driving inflation will continue to put pressure on the U.S. economy, which is still dealing with the impact of rate hikes:
In the short term, in the next few years, they are basically all inflationary factors. So it's hard to say that we have overcome the difficulties. I don't think so.
Currently, investors are turning their attention to signs of slowing U.S. economic growth. Recent data shows that U.S. inflation is increasingly approaching the Federal Reserve's 2% target, but the country's employment and manufacturing reports indicate some signs of economic weakness.
From the trend in the U.S. bond market, investors believe Dimon is overly concerned, with the bond market even expecting inflation to fall below the Fed's target. The latest data shows that the 10-year breakeven inflation rate has fallen to 2.02%, a new low since 2021, indicating that investors expect average inflation over the next decade to be below the Fed's 2% target.
Dimon had previously warned of a slowdown in the U.S. economy. Last month, he stated that the likelihood of an economic soft landing is about 35%-40%, meaning that in Dimon's view, a U.S. economic recession is a more likely outcome.
On the same day, Tuesday, JPMorgan Chase's stock price plummeted over 7% intraday, marking its worst daily decline in four years, with the bank's CEO warning that Wall Street's expectations for its performance are too optimistic