According to JPMorgan Chase CEO Jamie Dimon, the Federal Reserve will raise interest rates to a higher level than what has been predicted by many officials and strategists from Wall Street, as the central bank continues its efforts to combat ongoing inflation.
The top executive of JPMorgan, the leading consumer bank in the United States based on assets, stated during an interview with Fox Business Network on Tuesday that the terminal rate set by the Federal Reserve may reach 6%, which is significantly higher than the 5% many experts have predicted.
“Whether 5% interest rates are enough to slow inflation to where it needs to be, I don’t know,” Dimon said while referring to fiscal stimulus that was “so large and still largely unspent.”
“Is it 5%? My view is, it may very well be 6%,” he continued.
While speaking to Fox Business on Tuesday, Dimon called on the Fed to move rates to 5% and then wait before raising rates more to see how the economy reacts.
“We were a little slow getting going. It caught up. I don’t think there’s any harm done by waiting three to six months to see what the full effect this is around the world,” he said. “I’m on the side where it may not be enough.”
Dimon also noted that he doesn’t think wage inflation will peak “the way people think.”
After the December jobs report showed a decrease in wage growth, stocks experienced their initial significant increase of the year. Despite this, the report also indicated a significant discrepancy between the availability of jobs and the number of workers seeking employment.
“The lower-paid Americans are getting wages higher than the rate of inflation, and I don’t think in total that’s a bad thing — that’s a good thing,” Dimon said, adding his workers “haven’t had a pay raise for 20 years.”
“Inflation won’t quite go down the way people expected, though it will definitely be coming down a bit,” he said.
Yahoo Finance reports:
Dimon’s predictions for a higher terminal rate come the same week a series of Federal Reserve officials hinted at a similar possibility.
San Francisco Fed President Mary Daly said Monday during a live-streamed interview with the Wall Street Journal that she expects policymakers will raise interest rates to somewhere above 5%, while adding that the final rate will ultimately depend on the path of inflation.
Atlanta Federal Reserve President Raphael Bostic also said the U.S. central bank should raise interest rates above 5% by early in the second quarter and then hold them there for a “long time.”