Jamie Dimon said he would not take the prospect of a US recession off the table, but that the Federal Reserve should wait before cutting interest rates.
“The world is pricing in a soft landing, probably around 70-80%,” the chief executive of JPMorgan Chase & Co. said via video link to the Australian Financial Review Business Summit in Sydney on Tuesday. “I think the chance of a soft landing in the next year or two is half that. The worst case 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 lowering interest rates.
“They can always cut quickly and dramatically. Their credibility is a bit at stake here,” she said. “Unemployment in the US is very low right now, wages continue to rise.”
Dimon said that although the U.S. economy is currently “in something of a boom,” the risk of recession remains.
The comments take a slightly less optimistic tone from the top banker, who recently painted an optimistic outlook for world markets – a sharp divergence from his views less than two years ago, when central banks first began tightening interest rates. Dimon made headlines in 2022 for warning that a “hurricane” was about to hit the U.S. economy.
Read more: Dimon says CRE will get by as long as there is no recession
Federal Reserve Chair Jerome Powell suggested last week that the central bank is nearing the confidence to start lowering interest rates.
“We are waiting to gain more confidence that inflation will move sustainably to 2%,” Powell said Thursday in response to questions from the Senate Banking Committee. “When we have that confidence – and we are not far from it – it will be appropriate to start reducing the level of restriction.”