Mar 12, 2024 02:18 PM IST
JPMorgan Jamie Dimon on US recession: He said that economic indicators have been distorted by Covid-19.
American billionaire banker Jamie Dimon said that possibility of recession in the US is not “off the table” but the Federal Reserve should wait before it cuts interest rates. Chairman and Chief Executive Officer (CEO) of JPMorgan Chase said, “The world is pricing in a soft landing, at probably 70-80%. I think the chance of a soft landing in the next year or two is half that. The worst case would be stagflation.”
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Reflecting on how economic indicators have been distorted by Covid-19, he said that he takes them with “a grain of salt” because of which the Fed should wait for more clarity before lowering interest rates.
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“They can always cut quickly and dramatically. Their credibility is a bit at stake here,” he said, adding, “Unemployment in the United States is very low at the moment, wages continue to go up.”
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The US economy was “kind of booming” currently but the risk of a recession remained, he said in comments which are from a sharp divergence from his views less than two years ago when central banks first started tightening interest rates.
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In 2022, Jamie Dimon warned that a “hurricane” was about to hit the US economy. But Federal Reserve Chair Jerome Powell last week suggested that the central bank is getting close to the confidence that it needs to start lowering interest rates.
“We’re waiting to become more confident that inflation is moving sustainably at 2%. When we do get that confidence — and we’re not far from it — it’ll be appropriate to begin to dial back the level of restriction,” Jerome Powell said.
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