JP Morgan's Dimon warns: Trump's administration's attack on the Federal Reserve will trigger inflation

JPMorgan Chase CEO Jamie Dimon warned during a conference call on Tuesday that the Trump administration's attacks on the Federal Reserve could backfire, leading to higher borrowing costs and inflation.

Dimon made it clear that he fully supports the independence of the central bank and has "great respect" for Federal Reserve Chairman Jerome Powell personally. He pointed out, "Any action that undermines the independence of the Federal Reserve may not be a good idea. In my view, it will have the opposite effect. It will raise inflation expectations and could push up interest rates over time."

This statement comes as the market closely watches the increasingly tense relationship between the Federal Reserve and the White House. Just days earlier, Powell revealed that he is under a criminal investigation by the Trump administration's Department of Justice. In response, Trump stated on Tuesday that he believes his actions are justified and countered, "We should lower interest rates. Jamie Dimon might want higher rates. Maybe that way he can make more money."

Defending Central Bank Independence

Dimon's views have been widely echoed by senior figures in the global financial community. Eleven top central bank governors, including European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey, issued a statement emphasizing that central bank independence is the cornerstone of price, financial, and economic stability.

Other Wall Street executives also expressed concerns. Robin Vince, CEO of BNY Mellon, pointed out that eroding the Federal Reserve's independence runs counter to the White House's desire to improve consumer affordability. Vince stated, "Questioning one of the fundamental principles of the bond market actually risks backfiring, potentially pushing up interest rates because the market has to worry about things that frankly it shouldn't have to worry about."

JPMorgan Chase CFO Jeremy Barnum also echoed Dimon's warning, stating that the bigger issue is "the damage to the outlook for the U.S. economy and global economic stability."

Performance Pressure and Stock Price Decline

Beyond macro policy concerns, JPMorgan Chase's fourth-quarter results showed that despite the resilience of the U.S. economy, the banking business still faces challenges. The bank's Q4 net profit fell 7% year-on-year to $13 billion, slightly above analysts' expectations of $12.8 billion but below the $14 billion from the same period last year. As a result, JPMorgan Chase's stock price closed down about 4.2% in the New York market.

Weak performance in investment banking was the main drag. Investment banking fee income for the quarter fell 5% to $2.3 billion, missing analysts' growth targets. In particular, revenue from debt underwriting fell 2.5%, far short of the nearly 20% growth expected by the market. Barnum admitted, "Our performance is not what we wanted." However, the trading division performed well, with equity trading revenue surging 39% to $2.9 billion and fixed income trading revenue increasing by 7.5%.

Additionally, in response to Trump's proposal last Friday to set a cap on credit card interest rates at 10%, Barnum warned that this would reduce the availability of credit for consumers rather than lower borrowing costs. He stated that if faced with aggressive business change directives lacking legitimate justification, the bank would not rule out the possibility of initiating legal challenges