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JPMorgan CEO says interest rates will ‘go higher than 5.0%’: here’s why

By:
on Jan 19, 2023
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  • Jamie Dimon attributes recent easing in inflation to temporary factors.
  • Consumer prices were up 6.5% (in line with expectations) in December.
  • Benchmark S&P 500 index is currently down 10% versus its August high.

The U.S. central bank will have to push interest rates higher than what its currently projecting to win the battle against inflation, says Jamie Dimon – the Chief Executive of JPMorgan Chase & Co.

Dimon’s remarks in an interview with CNBC

Consumer prices have eased meaningfully in recent months versus the peak in June of 2022. Still, Dimon said in an interview with CNBC at the World Economic Forum that the Fed’s job was far from over yet.

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I actually think rates are probably going to go higher than 5.0% because I think there’s a lot of underlying inflation, which won’t go away so quick.

If true, that could mean continued pain for the equities market. In October, Dimon had warned the S&P 500 could break below the 3,000 level as Invezz reported here. The benchmark index is currently down 10% versus its August high.

Dimon attributes easing inflation to temporary factors

The recent leg down in inflation, as per the JPMorgan CEO, was related to the COVID lockdowns in China and a temporary pullback in oil prices.

We’ve had the benefit of China’s slowing down, the benefit of oil prices dropping a little bit. I think oil gas prices probably go up the next 10 years. China isn’t going to be deflationary anymore.

Last week, the U.S. Bureau of Labour Statistics said consumer prices were up 6.5% (in line with expectations) in December. The Federal Reserve is currently projecting a terminal rate of 5.1% this year.