For JPMorgan Chase president, inflation remains a threat

The president of the bank JPMorgan Chasethe influential Jamie Dimonfears that inflation in the United States could remain high for longer than authorities expected and does not rule out that interest rates will rise again, according to its annual letter to investors published on Monday.

The ecological transition, the increase in military spending and the fight against rising health costs “drive expenses“said the executive.

“That could make inflation more tenacious and push interest rates Federal Reserve) at a level higher than market forecasts”, he warned.

The 68-year-old manager maintained that investors are too optimistic about the hypothesis of a decline in inflation without recession or with modest growth.

The bank is evaluating several scenarios, including a rise in interest rates, up to a high 8%.

The reference rates of the Fed They are between 5.25% and 5.50%, the highest in more than 20 years.

The higher the rates, the more expensive credit becomes, which discourages consumption and investment, thus reducing pressures on prices.

Dimonconsidered one of the most powerful company directors in the world, insisted in his letter that the United States must reaffirm its position as a world leader based on its military, economic, diplomatic and moral power.

“The United States and the free Western world must 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 achieve their objectives, particularly against what they perceive as weak, incompetent and disorganized democracies. western“he emphasized Dimon.

Dimon predicts economic growth this year

The most influential banker in the United States, the CEO of JPMorgan ChaseJamie Dimon also told investors on Monday that he continues to expect the U.S. economy to be resilient and grow this year.

But he is concerned that geopolitical events such as the war in Ukraine and the war between Israel and Hamas, as well as political polarization in the United States, will create an environment ““that could generate risks capable of eclipsing anything since World War II.”.

The comments are part of Dimon’s annual letter to shareholders, which he often uses to comment on a wide variety of topics such as politics, regulation and global events and what they could mean for JPMorgan Chase, as well as the broader economy. .

Dimon He also used his letter to forcefully defend the company’s diversity and equality efforts, rejecting arguments from Republicans who have said such efforts at Fortune 500 companies, colleges and universities are discriminatory and promote left-wing ideology.

“America’s global leadership role is being challenged outside by other nations and inside by our polarized electorate.Dimon said. “We need to find ways to put aside our differences and work in partnership with other Western nations in the name of democracy. During this time of great crisis, it is essential that we come together to protect our essential freedoms, including free enterprise”.

TO Dimon He was especially concerned about continued large deficit spending by the federal government and other countries, as well as the need for countries like the United States to remilitarize and continue building green infrastructure, all of which will likely keep inflation higher than investors expect.

Due to these problems, Dimon said he is less optimistic about the U.S. economy achieving a “soft landing”, which he defined as modest growth coupled with declining inflation and interest rates, compared to the broader market. While he says investors are pricing in a probability of “70% to 80%” of a soft landing, Dimon believes the chances of such an ideal outcome are “much smaller” than that.

Additionally, as some economists question whether the Federal Reserve will be able to meet its projection of lowering rates three times this year, Dimon warned of the possibility of rates rising to 8% or more. The Fed’s reference rate is currently in a range of 5.25% to 5.50%.

“These significant and somewhat unprecedented forces cause us to remain cautious“, said.

With information from AFP and AP