Inflation could remain high for longer than expected, putting the near-term health of the US economy at risk, JPMorgan Chase Chief Executive Officer Jamie Dimon said on Monday.
In his annual letter to shareholders, Dimon pointed to “persistent inflationary pressures” that are undermining stock market confidence in the outlook and could lead to even higher interest rates.
“Equity values, by most measures, are at the high end of the valuation range,” said Dimon, the longtime chief executive of the largest U.S. bank by assets, who has often noted the outlook carefully in recent years.
“These markets seem to be pricing in a 70 to 80 percent chance of a soft landing — moderate growth along with falling inflation and interest rates. I think the odds are much lower than that.”
Dimon pointed to continued fiscal investment, changes in trade policy and green economy spending as inflationary factors, despite many economic indicators remaining “good”.
Asian markets were mostly higher as traders weighed the outlook for interest rates
He said the bank was ready for a “very wide range of interest rates”, from 2% to 8%.
Dimon, who tackled a wide range of issues in the letter, including artificial intelligence and political aggression in the United States ahead of November’s presidential election, also highlighted a more precarious geopolitical environment.
He called the Russian invasion of Ukraine in February 2022 “another day in history that will live in infamy,” referring to Franklin D Roosevelt’s famous quote about the 1941 attack on Pearl Harbor.
Dimon also pointed to “the subsequent heinous attack on Israel and the ongoing violence in the Middle East” as facts that serve as a reality check.
“America and the free Western world can no longer maintain a false sense of security based on the illusion that dictatorships and oppressive nations will not use their economic and military might to advance their goals — especially against those they see Western democracies as weak, incompetent and disorganized,” Dimon said.
Source: AFP