Stock Groups

Jamie Dimon warns it’s possible the Fed could be forced into a sharp move next year


JP Morgan CEO Jamie Dimon looks on during the inauguration of the new French headquarters of US’ JP Morgan bank on June 29, 2021 in Paris.

Getty Images CEO warned investors that they could have to take a tough policy action next year despite their best efforts in calming inflationary and interest rate concerns.| AFP | Getty Images

JPMorgan Chase CEO Jamie Dimon has warned investors that the Federal Reserve could be still be forced into a sharp policy move next year — despite its best efforts to soothe concerns over inflation and interest rates.

Fed Chairman Jerome Powell has already suggested that the central bank could start to dial back on its pandemic-era monetary stimulus before the end of this year. On Wednesday, the Fed Chairman will give more detail at the Fed policy meeting’s end. Also, the U.S. central banks will publish their highly anticipated inflation and interest rate forecasts.

CNBC-TV18’s Dimon stated that the central bank may have to take action if inflation continues to rise in the United States over the coming months.

If inflation rises so much that the Fed needs to pull liquidity from the bank, there will be a massive reaction. In an interview that aired Tuesday, Dimon stated that while I am not anticipating that they will do so in the near future.

“The Fed can’t always be proactive — I mean, sometimes they’re going to have to be reactive.”

The top uncertainty for the Fed has been the path of inflation. According to the latest data, U.S. consumer price inflation was slightly lower than the 13.-year peak of 5.4% recorded in July.

Powell has claimed that the price rise is temporary. Dimon stated that the U.S. may need to acknowledge that some of these price rises are permanent if they continue to see high inflation numbers into December.

“I doubt [come] December, people will say it’s all transitory when it’s now been going on for quite a while,” he told CNBC-TV18, but added that concerns would be curbed if global growth remains healthy while inflation is high.

“Inflation to me, it looks like there’s a part that’s transitory and there’s part that’s not — that’s not a disaster,” he added.