JPMorgan Chase CEO Jamie Dimon speaks with CNBC’s Leslie Picker in Bozeman, Montana, on August 2, 2023.
CNBC
JPMorgan Chase & Co. Chief Executive Jamie Dimon on Tuesday warned of the dangers of locking in on the economic outlook, especially given the poor recent performance of central banks such as the Federal Reserve.
In the latest of multiple warnings about what lies ahead for the head of America’s largest bank by assets, he warned that myriad ongoing factors are making things even more difficult.
“Rather than deciding on a course of action, prepare for possibilities and probabilities. I’ve never seen anyone decide on that,” Dimon said during a panel discussion at the Future Investment Initiative Summit in Riyadh, Saudi Arabia. said.
“I would like to point out that central banks were 100% completely wrong 18 months ago,” he added. “We’re going to be pretty cautious about what happens next year.”
The comments refer back to the Fed’s outlook for early 2022 and much of the previous year, when central bank officials had insisted that the spike in inflation would be “temporary.”
In addition to the misdiagnosis on prices, Fed officials collectively thought the key interest rate would rise to just 2.8% by the end of 2023 (currently 5.25%), according to forecasts released in March 2022. Over). Core inflation rate is 2.8%It is 1.1 percentage points below current levels as measured by the central bank’s preferred gauge.
“I criticize the sense of omnipotence that central banks and governments can manage all of this,” Dimon said. “I’m cautious.”
Much of Wall Street is focused on whether the Fed will raise interest rates by another quarter of a point by the end of 2023, but Dimon said, “Even if rates rise by 25 basis points, it’s still a 25 basis point increase. I don’t think it would make any difference,” he said. More like zero, none, nada. ”
Among other recent warnings, Dimon warned of a potential scenario in which the federal funds rate could exceed 7%. “This may be the most dangerous time the world has seen in decades,” he warned when the bank released its earnings report earlier this month.
“If the whole curve goes up 100 basis points, I’m prepared for it,” he added. “I don’t know if that’s going to happen, but if you look at what we’re seeing today, it’s more like the ’70s, with a lot of spending and a lot of it potentially going to waste.” (1 basis point is equivalent to 0.01%.)
Dimon said he supports ESG principles outside of finance, but criticized the government for playing “whack-a-mole” without a coordinated strategy.
“You can’t build pipelines to reduce coal emissions. You can’t get permits to build things like solar and wind power,” he said. “So we better get our act together.”
