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Davos 2023: CEO of JP Morgan Chase, Jamie Dimon claimed that the interest rates could go higher, probably more than 5%, than what has been projected by the Federal Reserve as a result of rising inflation.
Dimon made the statement while talking on CNBC’s show Squawk Box at the World Economic Forum being held in Davos, Switzerland.
“I actually think rates are probably going to go higher than 5% because I think there’s a lot of underlying inflation, which won’t go away so quick.”
FED’s historic interest rate hike
The Federal Reserve announced in December that the targeted increase in interest rate will be between 4.25% to 4.5% to battle the rising inflation. This is the highest percentage by which interest rates have been hiked in the past 15 years, making it a benchmark decision.
Recently, there have been certain signs of inflation slashing down, however, Dimon claimed that this is because of the slowing down of the economy of China following the breakout of Covid 19 and the drop in oil prices. He added that the oil prices will rise in the coming 10 years and China will overcome the slow pace at which it has been gripped.
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Recession to follow?
The series of inflation-combative rate hikes are raising the concerns surrounding recession. The IMF chief has already warned of two-thirds of the global economy to be in recession this year. The labor market and the consumer market have stayed strong despite rising rates. This has pushed the FED to increase rates.
Dimon also mentions that if there is even a mild recession in the U.S., the interest rates will go up to 6%. He acknowledged that there will be ups and downs in the phase, however, he is not about recession but the public policy during these times.
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