Jamie Dimon expects the Federal Reserve will raise interest rates higher than most officials and Wall Street strategists have forecast as the U.S. central bank continues its fight against persistent inflation.
The chief executive officer of JPMorgan (JPM), the largest consumer bank in the U.S. by assets, said Tuesday in an interview with Fox Business Network that the Fed’s terminal rate may hit 6%, a level notably above the 5% many have called for.
“Whether 5% interest rates are enough to slow inflation to where it needs to be, I don’t know,” Dimon said during the discussion at JPMorgan’s annual health-care investment-banking conference in San Francisco, citing fiscal stimulus that was “so large and still largely unspent.”
“Is it 5%? My view is, it may very well be 6%,” he added.
This time last year, Dimon was among the first voices on Wall Street to predict – correctly – that Federal Reserve officials would deliver as many as six or seven increases to their benchmark policy rate as prices rose at a historic pace. He said the three or four hikes investors were bracing for at the time were a low estimate.
In 2022, the U.S. central bank lifted rates seven times to a cumulative increase of 4.25% to the highest in 15 years from near-zero levels. At least 75 basis points more of hikes are expected this year.
Dimon also told Fox Business on Tuesday that Fed officials should move rates to 5% and then pause to assess their lagging impacts on the U.S. economy.
"We were a little slow getting going. It caught up. I don't think there's any harm done by waiting three to six months to see what the full effect this is around the world," he said. "I'm on the side where it may not be enough."
He also separately indicated he was not sure if wage inflation would peak "the way people think."
Last week, stocks staged their first big rally of the year after December's jobs report reflected a slowdown in wage growth, while job openings reflected a still sizable imbalance between labor supply and demand.
"The lower-paid Americans are getting wages higher than the rate of inflation, and I don't think in total that's a bad thing — that's a good thing," Dimon said, adding this cohort of workers "haven't had a pay raise for 20 years."
"Inflation won't quite go down the way people expected, though it will definitely be coming down a bit," he said.
Dimon's predictions for a higher terminal rate come the same week a series of Federal Reserve officials hinted at a similar possibility.
San Francisco Fed President Mary Daly said Monday during a live-streamed interview with the Wall Street Journal that she expects policymakers will raise interest rates to somewhere above 5%, while adding that the final rate will ultimately depend on the path of inflation.
Atlanta Federal Reserve President Raphael Bostic also said the U.S. central bank should raise interest rates above 5% by early in the second quarter and then hold them there for a "long time."
The latest economic forecasts from the Fed's December meeting showed officials project their key overnight lending rate rising to 5.1% in 2023.
The rate-setting Federal Open Market Committee (FOMC) is scheduled to meet Jan. 31-Feb. 2 and deliver its first interest rate hike of this year and eighth of the current cycle.
JPMorgan Chase is scheduled to report fourth-quarter earnings results on Friday.
—
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
Click here for the latest trending stock tickers of the Yahoo Finance platform
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
What to watch in markets on Wednesday, January 11, 2023.
Coinbase cuts staff amid a battered crypto market, Coca-Cola and PepsiCo are in the FTC’s sights over pricing, European luxury car makers are after the EV market, and other news to start your day.
JPMorgan CEO Jamie Dimon says the U.S. 'shouldn't be afraid' of China, and that American businesses pulling out of the country would not be good for consumers.
Factors like affordability, health care, weather, and more were all considered when putting together this list of best states to retire in the United States.
Macroeconomic challenges have reshaped the way the market is thinking about growth stocks. Cloudflare (NYSE: NET) is the world's leading provider of protection against distributed-denial-of-service (DDoS) attacks. The company ended the third quarter with 1,908 customers generating more than $100,000 in annualized sales, up from 451 in the third quarter of 2019 and good for a compound annual growth rate of 61% over the last two years.
Court documents submitted by the Scottsdale Police Department say Hurry and the victim lived together since May 2022 in California after she began as a housekeeper. On May 25, Hurry reportedly asked her to come with him to Arizona to make money. They first stayed in Tucson. That's where police say Hurry convinced the victim to let him take photos of her for an ad he was going to create to offer her to others for sex acts.
BENGALURU (Reuters) -Infosys Ltd raised its annual revenue outlook on Thursday after a strong deal pipeline helped India's No.2 IT services company by revenue report a better-than-expected quarterly profit. The Bengaluru-based company said it expects revenue growth of 16% to 16.5% for the financial year to March, compared to the growth of 15%-16% it had projected earlier. The company signed 32 large deals, 30.4% more than it did in the same quarter last year, for a total of $3.3 billion – the most in two years, Infosys said.
Attorney General Steve Marshall indicated that he would use the state's chemical-endangerment law to prosecute pregnant people who took abortion pills.
Alabama’s attorney general said medication abortion remains illegal in the state despite recent Biden administration moves to expand access to the drugs, and indicated that a law regarding the chemical endangerment of a child could be used to prosecute women who use abortion pills. Alabama’s near-total abortion ban, which took effect immediately after the Supreme…
We're picking some upsets in the wild-card round of the NFL playoffs. Which teams could shock the favorites and advance to the NFL Divisional Round?
The U.S. Supreme Court on Wednesday allowed New York to enforce a Democratic-backed gun control law adopted after the justices last year struck down the state's limits on carrying concealed handguns outside the home in a landmark ruling that expanded gun rights. The justices rejected a request by six members of the firearms rights group Gun Owners of America to throw out a lower court's decision allowing the law to be enforced. U.S. District Judge Glenn Suddaby in October blocked enforcement of much of the law but the Manhattan-based 2nd U.S. Circuit Court of Appeals in December put that decision on hold while the state pursues an appeal.
JPMorgan Chase CEO Jamie Dimon calls out the "dangerous" government debt and "shenanigans of politics" impacting sectors which could help the U.S. economy grow by 3%.
JPMorgan is suing the leaders of college financial-aid platform Frank, alleging they duped the bank.
Executives, experts, and influencers join the Yahoo Finance team to discuss what's moving the world of finance.
The IRS is beginning to see “a light at the end of the tunnel” of its customer service struggles, thanks to tens of billions of new money from the Democrats' climate and health law and the authority to hire more people, according to an independent watchdog within the agency. In the report Wednesday to Congress from Erin M. Collins, who leads the office assigned to protect taxpayers’ rights under the Taxpayer Bill of Rights, cited “more misery” for taxpayers last year and spoke of the challenges still ahead. The agency began 2022 with a backlog of 4.7 million individual returns and 3.6 million amended returns.
Electric vehicles took two of three categories for the first time in this year's North American Car, Truck and Utility of the Year awards. The Integra, a small sedan from Honda's Acura performance brand, won car of the year. Six of the nine finalists were powered by batteries, and analysts say the more of the awards are likely to go to electric vehicles in the future as the industry spends billions to roll out multiple new EV models.
JPMorgan Chase CEO Jamie Dimon says he shouldn't have used the word "hurricane" to describe what lies ahead for the U.S. economy last year, but adds that there still are "storm clouds" and "heightened uncertainty."
Police says boy brought mother’s legally purchased gun to school
For roughly 30 years Federal Reserve policymakers and other central bankers enjoyed a world where market interest rates were falling, inflation was low, globalization effectively expanded the supply of labor, and, at the margin, markets for goods and services were becoming more open and stable. The U.S. central bank is already adjusting to one unanticipated set of changes – an outbreak of inflation coupled with stalled growth in the U.S. labor force. Economists sometimes describe the sorts of changes that may be underway in terms of a new economic "regime," but "identification becomes something of an art form," Atlanta Fed President Raphael Bostic said last Friday on a panel at the annual meeting of the American Economic Association (AEA) in New Orleans.
The Bureau of Labor Statistics released its December Consumer Price Index (CPI) at 8:30 a.m. ET on Thursday. Here are the main figures from the report, compared to Wall Street estimates.
