Jamie Dimon, the chief executive of JPMorgan Chase & Co JPM, has reportedly warned against declaring victory against inflation too early, saying the Federal Reserve could raise interest rates over the 5% mark if higher prices remained “sticky.”
Dimon's comments follow the optimism shown by U.S. markets after Federal Reserve Chair Jerome Powell reiterated during a discussion at The Economic Club of Washington, D.C. on Tuesday that the disinflationary process has begun.
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“People should take a deep breath on this one before they declare victory because a month's number looked good," he said, according to a Reuters report. “It's perfectly reasonable for the Fed to go to 5% and wait a while,” Dimon added.
He also noted that if inflation falls to 3.5% or 4% and remains there, “you may have to go higher than 5% and that could affect short rates, longer rates,” he told Reuters.
Fed Official Comments: Central bank officials are seemingly trying to coordinate, as Mohamed El-Erian highlighted in his tweet, to correct the markets' understanding of Chair Powell's comments.
Fed Governor Christopher Waller said in his remarks to an Arkansas State University conference that while wage growth has slowed, the decline is not enough and that "the Fed will need to keep a tight stance of monetary policy for some time,” a Reuters report said.
Debt Ceiling: Dimon also pointed out that a default on U.S. debt would be potentially “catastrophic.” “We cannot have a default,” Dimon said adding that such a scenario could cause permanent damage to America and “could destroy its future,” he said.
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