JPMorgan Chase CEO advised the Fed not to rush to reduce interest rates

General Director (CEO) Jamie Dimon, JPMorgan Chase Bank, said he does not rule out the possibility of a recession in the US economy, but thinks the US Federal Reserve (Fed) should wait before starting to cut interest rates. In the financial market, investors and analysts are betting heavily on the possibility that the Fed will begin to loosen monetary policy in June.

“The world is thinking the US economy will have a soft landing, with the possibility of such a scenario occurring at about 70-80%. I think the possibility of a soft landing in the next 1-2 years is only about half of that level. The worst case scenario is that the economy falls into a state of stagnant growth combined with high inflation (stagflation),” the top executive of the largest US bank by asset value said on Tuesday. on video connection at a financial conference in Sydney, Australia.

Mr. Dimon said economic indicators have been distorted by the Covid-19 pandemic and he does not completely trust those figures. Therefore, he believes that the Fed should wait until things become clearer before loosening monetary policy. “The Fed can always reduce interest rates quickly and sharply. Their reputation is a bit at risk here. The unemployment rate in the US is currently very low, wages continue to increase,” he said.

According to the CEO, the US economy currently appears to be growing strongly, but recession risks are still there.

Mr. Dimon’s statement is somewhat less optimistic than what he said recently – a drastic change in perspective compared to what he gave less than 2 years ago when the Fed and central banks Other major companies began to sharply increase interest rates to fight inflation. In 2022, Mr. Dimon caused ink in the press when he warned that the US economy was about to suffer a “big storm”.

For his part, Fed Chairman Jerome Powell signaled last week that the central bank was close to having enough confidence to start cutting interest rates. “We are waiting to have more confidence that inflation is falling sustainably towards the 2% threshold. Once we have that confidence, which we are not far away from, it is appropriate to reduce the level of monetary policy tightening,” Mr. Powell said when testifying before the Senate Banking Committee.

According to market forecasts, the Fed will keep interest rates unchanged at the next monetary policy meeting on March 19-20. At this Fed meeting, the focus of investors’ attention will be on updating the Fed’s quarterly economic forecast, including forecasts on gross domestic product (GDP) growth, inflation, and unemployment. and interest rates.

If in this forecast update, Fed officials still expect three interest rate cuts, each by 0.25 percentage points this year, then the start of lowering interest rates will almost certainly be initiated. in June as currently forecast by the market.

According to Dreyfus and Mellon chief economist Vincent Reinhart, the Fed’s message at the March meeting will be “we’re on track.” “The Fed is close to having the necessary level of confidence” to begin cutting the federal funds rate from 5.25-5.5%, Mr. Reinhart said.

One indicator showing the stability of the US economy is the growth of the job market – a factor that prevents the Fed from rushing to reduce interest rates. Every month, the economy still creates a large number of jobs, even exceeding analysts’ forecasts.

For example, last February, the non-agricultural sector of the economy had 275,000 new jobs, a number higher than forecast. However, the US Department of Labor report also showed some signs of weakness in the job market, in which wages increased slowly and the unemployment rate increased slightly to 3.9% – the highest level in 2 years. year.

Before the next meeting, the Fed has some more important economic data to evaluate, including the February consumer price index (CPI) scheduled for release on March 12 and the producer price index (CPI) for February scheduled for release on March 12. (PPI) is expected to be announced on March 13.

Trả lời

Email của bạn sẽ không được hiển thị công khai. Các trường bắt buộc được đánh dấu *