FILE - JP Morgan CEO Jamie Dimon looks on during the inauguration the new French headquarters of JP Morgan bank, June 29, 2021 in Paris. “We are prepared for a very broad range of interest rates, from 2% to 8% or even more, with equally wide-ranging economic outcomes – from strong economic growth with moderate inflation ... to a recession with inflation; i.e., stagflation," Dimon wrote.
The Federal Funds Rate currently sits at 5.33%, a level that has held steady since July. The Consumer Price Index , which measures inflation by assessing the average change in costs for a market basket of goods and services, increased 3.5% from the previous year. Inflation had risen roughly 5% from 2021 to mid-2022 before trending downward.
Dimon argued the odds the U.S. would reduce inflation while avoiding a recession were lower than the market expected. “These markets seem to be pricing in at a 70% to 80% chance of a soft landing – modest growth along with declining inflation and interest rates,” he wrote. “I believe the odds are a lot lower than that.”found 79% of Americans worried at least a fair amount about inflation, while 45% stated U.S. economic conditions were poor.
“There seems to be an enormous focus, too much so, on monthly inflation data and modest changes to interest rates,” Dimon said. “But the die may be cast – interest rates looking out a year or two may be predetermined by all of the factors I mentioned above. Small chances in interest rates today may have less impact on inflation in the future than many people believe.