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

The head of one of the world's largest banks warned that US interest rates could rise to 8%.

Jamie Dimon, president of JPMorgan Chase, said his bank was preparing for higher interest rates due to “ongoing inflationary pressures.”

Central banks around the world have been busy raising interest rates in an attempt to limit rising prices.

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

In his annual letter to shareholders, Dimon said the bank was prepared for a “very wide range” of interest rates, from 2% to 8% or even higher, likely to be raised due to higher government spending and the need to limit price rises. .

Dimon's comments come as US interest rates range between 5.25% and 5.5%, higher than they have been in more than 20 years.

By making borrowing more expensive, higher interest rates encourage saving and reduce borrowing for home purchases and business investments, cooling the economy and relieving the pressures that push prices higher.

The prevailing expectation is that interest rates will fall in 2024, with markets pricing in a quarter-percentage-point rate cut by the US Federal Reserve this year.

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

The US Federal Reserve is scheduled to make its next decision on how interest rates will move at the end of the month.

The bank is expected to keep interest rates at the current level, with the first cut likely in June. The European Central Bank is also expected to make its first cut in June.

However, some analysts on Tuesday wondered whether interest rate cuts were on the horizon for the summer in the United States.

The latest US inflation figures are due to be published on Wednesday, with the Consumer Price Index (CPI) inflation expected to rise to 3.4% year-on-year, up from 3.2% in February, perhaps making it more difficult to justify interest rate cuts.

In a speech at Stanford University in early April, Federal Reserve Chairman Jay Powell said: “If the economy develops as broadly as we expect, most Federal Open Market Committee participants view it as likely appropriate to begin cutting interest rates.” “Sometime this year.”

Dimon has been CEO of JPMorgan Chase since the end of 2005. One year later, he also became the bank's chairman and president. He is the longest-serving CEO 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.