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Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co defined the challenges facing the US economy as a “hurricane” in the making and urged the Federal Reserve to take action to avoid a recession.
Jamie Dimon, chief executive of JP Morgan Chase, the largest US bank, warned investors to be prepared for “a hurricane” that is coming under pressure from aggressive monetary policy at home and the war in Ukraine.
“This hurricane is here now and it’s coming our way. We don’t know if it’s a minor one or big storm Sandy, so you better get ready,” Dimon warned at an investor conference organized by Alliance Bernstein Holdings.
The manager affirmed that in his bank the greatest concerns revolve around the highest inflation in 40 years and the response given by the United States Federal Reserve. “At JP Morgan we are already preparing and we are going to be very conservative with our balance sheets,” Dimon said.
In the United States, the Consumer Price Index stood at 8.3% year-on-year in April, slightly below the 8.5% year-on-year registered in March. This motivated the Fed to make two consecutive increases in interest rates, which now stand between 0.75% and 1%.
“We are not applying the correct actions to protect Europe”
The Federal Reserve is under pressure from an inflation rate that triples its 2% target and has caused prices to rise for Americans. Their task is not an easy one: limit demand enough to curb inflation, but be careful not to cause an economic recession.
“The Fed has to deal with this now with the rate hike and QT (quantitative tightening). In my opinion, they have to do QT. They have no choice because there is so much liquidity in the system,” Dimon said.
The executive said that “we all believe that the Fed can handle the situation”, but that does not prevent “storm clouds” from appearing on the horizon.
According to him, the prices of a barrel of oil, which are now around 120 dollars per barrel, could go up to 150 and 175 dollars and added: “We are not applying the correct actions to protect Europe from what will happen to oil in the short term”.
Uncertainty over monetary policy, the war in Ukraine, prolonged pandemic supply chain outages, and rising Treasury yields constantly rock global stock markets. The benchmark S&P 500 index is down 13.3% so far this year.
With EFE and Reuters
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