Jamie Dimon said he would not rule the prospect of a US recession “off the table” but that the Federal Reserve should wait before it cuts interest rates.
“The world is looking at a soft landing of probably 70-80%,” the JPMorgan Chase & Co. CEO said. via video link at the Financial Review Australian Business Summit in Sydney on Tuesday. “I think the likelihood of a soft landing in the next year or two is half as likely. The worst option would be stagflation.”
Dimon said economic indicators have been distorted by Covid-19 and he takes them with a “grain of salt,” saying the Fed should wait for more clarity before cutting interest rates.
“They can always cut quickly and sharply. Their credibility is a little bit at stake here,” he said. “Unemployment in the US is very low at the moment, and wages continue to rise.”
Dimon said that while the U.S. economy is currently in “sort of a boom,” the risk of recession remains.
The comments sound somewhat less sanguine from a leading banker who recently painted a bullish forecast for global markets – a sharp departure from his views less than two years ago when central banks first began tightening interest rates. In 2022, Dimon made headlines by warning that a “hurricane” was about to hit the US economy.
Read more: Dimon says CRE will ‘cope’ as long as there’s no recession
Federal Reserve Chairman Jerome Powell last week suggested that the central bank approaching to the confidence needed to begin lowering interest rates.
“We’re looking for more confidence that inflation is moving sustainably at 2%,” Powell said Thursday in response to questions from the Senate Banking Committee. “Once we have that confidence – and we are not far away – it will be appropriate to start reducing the level of restrictions.”