Jamie Dimon says rates will stay above 5% as ‘underlying inflation remains high’

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JPMorgan Chase CEO Jamie Dimon believes interest rates may be higher than the Federal Reserve expects because inflation remains very high.

“I think rates will go over 5% … because I think there’s a lot of inflation that’s not going away quickly,” Dimon said Thursday on CNBC’s “Squawk Box.” The World Economic Forum held in Davos, Switzerland.

To combat rising prices, the Federal Reserve raised its benchmark interest rate to a target range of 4.25% to 4.5%, the highest level in 15 years. The expected “terminal rate,” or the point at which officials expect rate hikes to end, was set at 5.1% at their December meeting.

The consumer price index, which measures the cost of a broad basket of goods and services, rose 6.5% in December from a year earlier, the slowest annual increase since October 2021.

Dimon said the recent drop in inflation was due to temporary factors, such as falling oil prices and a slowdown in China due to the pandemic.

“We’ve benefited from the slowdown in China, a little bit of lower oil prices,” Dimon said. “I think oil and gas prices are likely to rise over the next 10 years…China is no longer deflationary.”

A series of aggressive rate hikes has raised the risk of a US recession. Central bankers believe there is still room for rate hikes as the labor market and consumption remain strong.

The JPMorgan chief said interest rates would rise to 6% if the United States slipped into a mild recession. He said that it is difficult for anyone to predict the economic downturn.

“I know there will be recessions, recessions and recessions. I don’t spend a lot of time worrying about it. “I am concerned about these bad public policies that are hurting American growth,” he said. Dimon said.

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