CEO of JP Morgan: Interest rates may rise to 8 percent

(ABM FN-Dow Jones) US investment bank JPMorgan Chase's CEO, Jamie Dimon, believes inflation pressure could continue for a long time and takes into account much higher interest rates of 8 percent or more. Dimon wrote this in a letter to investors in the bank's annual report.

Given the high valuations in equity markets and low risk premiums on fixed-income securities, markets appear to be estimating a 70 to 80 percent chance of a soft landing for the US economy. Damon is less optimistic about that.

According to him, much attention is paid to monthly inflation figures and modest adjustments in interest rates.

However, according to Dimon, there are several factors that create persistent inflationary pressures, such as government budget deficits, global rearmament, the reorganization of global trade, and the capital needs of the new green economy with potentially higher energy costs.

Dimon said the government deficit today is larger than it was during the Vietnam War, when inflation rose to more than 10%. He is concerned about the consequences of monetary stimulus through central banks buying bonds to increase the money supply.

Therefore, the bank takes into account an inflation rate ranging between 2 and 8 percent (or even more). Outlook for the economy ranges from strong growth with moderate inflation to strong inflation with recession or stagflation.

Source: ABM Financial News

ABM Financial News is a resource for stock market news, video and data, both for real-time trading platforms and trading rooms and for online and offline media publications. The information in this article is not intended to provide professional investment advice or a recommendation to make particular investments.