JP Morgan CEO: Fed rate cut won't be "earth-shattering"

Jamie Dimon, CEO of JPMorgan Chase, stated that "whether the Fed cuts interest rates by 25 basis points or 50 basis points, this move 'will not be earth-shattering'."

Dimon said at a meeting on Tuesday, "They need to do this. But raising and lowering interest rates by the Fed are minor matters because there is still the real economy under the changes in interest rates."

Fed officials are expected to cut interest rates this week for the first time in over four years. Bond traders have differing opinions on whether the Fed will cut rates by 50 basis points or 25 basis points before making a decision, as the Fed will continue to pursue a soft landing.

Dimon stated last month that he "doesn't think it's as important as others think" due to ongoing economic uncertainty and inflation pressures.

For over a year, he has been warning that inflation may be more severe than investors expect, and in his annual letter to shareholders in April, he wrote that his company is prepared for interest rates to be in the range of 2% to 8% or even higher.

On Tuesday, at the annual Financial Markets Quality Conference at Georgetown University's Pusateri Financial Markets and Policy Center, Dimon once again emphasized that "geopolitical issues" — including the Russia-Ukraine conflict, Middle East wars, and relations between major powers — are his top concerns.

He said, "This makes any problem I've encountered in my work pale in comparison."

"People are overly concerned about whether we will have a soft landing or a hard landing," Dimon said. "To be honest, most of us have been through these things, so it's not that important."

A regular survey of fund managers by Bank of America this week showed that only 11% of investors believe the U.S. economy will experience a hard landing. 79% of investors still expect the economy to slow moderately. The rate market once again shows its excitement. Therefore, the direct challenge facing the market is focused on Powell's communication skills, which will face a severe test in the back-and-forth of the post-meeting press conference early Thursday morning.

While the U.S. economy is slowing down rather than collapsing, Sam Lynton-Brown, global head of macro strategy at BNP Paribas, said, "An important theme is that the uniqueness of the U.S. is fading. This means that U.S. bond yields may decrease relative to peers, economic growth may decrease relative to peers, and the extent to which U.S. assets outperform peers may diminish."

Ahmed from Fidelity said, "Once the Fed hurdle is cleared, the market will face election risks, economic recession risks, or, don't forget, the possibility of inflation making a comeback."