JP Morgan: Jamie Dimon warns of a significant increase in US interest rates

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Don’t believe in a “soft landing” for the US economy:

JP Morgan CEO

Jamie Dimon

Photo: Evelyn Hockstein / REUTERS

Jamie Dimon

(68) expects the US economy to be resilient and continue to grow this year. At the same time, however, the CEO of JP Morgan fears geopolitical risks such as the war in Ukraine and the war between Israel and Hamas, as well as the political division in the USA. These events create risks “that could dwarf anything since World War II,” writes the head of the largest U.S. bank in his widely read annual letter to shareholders.

Dimon is particularly concerned about the US government's continued high spending as well as military build-up and the expansion of green infrastructure in the US. All of this seems “inflationary”. Dimon therefore does not believe in a “soft landing” for the US economy. He even fears interest rates will rise “to 8 percent or more.”

The key interest rate in the USA is currently in a range of 5.25 to 5.5 percent. Market participants' expectations that the US Federal Reserve (Fed) could cut interest rates up to three times this year had driven US stock markets to record highs. But inflation is more stubborn than expected; consumer prices rose by 3.2 percent in February, after 3.1 percent in January. The yields on important ten-year US government bonds have also recently risen significantly again. Last week, Fed member

Neel Kashkari

shocked markets by saying there might not be any interest rate cuts this year.

In his 61-page letter, Dimon also pays particular attention to the topic of artificial intelligence (AI). “We firmly believe that the consequences of AI will be extraordinary,” Dimon writes. The impact may be as transformative as some of the most important technological inventions of the past hundred years. “Just think of printing, the steam engine, electricity, the computer and the Internet.” The bank itself has already found 400 use cases for AI, especially in marketing and risk management.

Dimon is the longest-serving head of a major US bank. The 68-year-old has headed JP Morgan since 2004 and is now one of the most powerful and best-paid bank bosses in the USA.

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