NEW YORK (AFP) – Inflation could remain elevated for longer than expected, posing a risk to the United States (US) economy’s near-term health, JPMorgan Chase Chief Executive Jamie Dimon said on Monday.
In his annual letter to shareholders, Dimon pointed to “persistent inflationary pressures” that belie the stock market’s confidence about the outlook and could result in even higher interest rates.
“Equity values, by most measures, are at the high end of the valuation range,” said Dimon, the longtime chief executive officer of the biggest US bank by assets, who has often struck a cautious note about the outlook in recent years.
“These markets seem to be pricing in at a 70 to 80 per cent chance of a soft landing – modest growth along with declining inflation and interest rates. I believe the odds are a lot lower than that.”
Dimon pointed to ongoing fiscal investment, trade policy shifts and green economy spending as inflationary drivers in spite of many economic indicators that have remained “good.”
He said the bank is prepared for a “very broad range of interest rates,” from two per cent to eight per cent.
Dimon, who tackled a broad range of issues in the letter including artificial intelligence and political acrimony in the US ahead of November’s presidential election, also highlighted a more precarious geopolitical environment.
He called the February 2022 invasion of Ukraine “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 nodded to the ongoing violence in the Middle East as events 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 won’t use their economic and military powers to advance their aims – particularly against what they perceive as weak, incompetent and disorganised Western democracies,” Dimon said.
