‘Wall Street Emperor’ Dimon “Next year’s US recession… 5% interest rate is difficult to catch inflation”



[아시아경제 뉴욕=조슬기나 특파원]JP Morgan Chase CEO Jamie Dimon, dubbed the “King of Wall Street,” warned on the 6th (local time) that high inflation would derail the economy and lead to a US recession next year. He was also concerned that raising the benchmark interest rate to the 5% range may not be enough to control inflation.

CEO Dimon appeared on CNBC’s Squawk Box that day and said, “Inflation is eating away at everything.”

He said that the recent consumer and business economy was okay, and he evaluated that consumers in the United States saved $1.5 trillion through the Corona 19 Pandemic (global pandemic) stimulus program, and through this, they were able to increase their spending by 10% more than in 2021. However, it is analyzed that even that $1.5 trillion will be exhausted by the middle of next year due to high inflation.

“These things could derail the economy and cause a mild or severe recession, as people fear,” said Dimon.

This is in line with what he had previously warned of “an economic hurricane coming soon” since last June. Even at the time, CEO Dimon diagnosed that a recession in the US economy would be inevitable due to soaring inflation, a steeper-than-expected rate hike, the unknown aftermath of quantitative easing (QE), and the prolonged Russian invasion of Ukraine.

“We haven’t seen this kind of disruption in the world in a long time,” said Dimon. However, he said it was still unclear whether the U.S. recession next year would be moderate or serious. “What I’m talking about is a hurricane,” he added, “but the storm clouds may abate. As a risk manager, I prepare for both, but I can’t guess what’s going to happen.”

In particular, CEO Dimon pointed out that the central bank, the Federal Reserve (Fed), is expected to exceed 5% next year as high-intensity tightening continues, but even this “may not be enough to control inflation.” The Fed, which has been conducting high-intensity tightening since the beginning of the year, has raised the upper end of the current interest rate to the 4% level through an unprecedented 4 consecutive giant steps (rising the base rate by 0.75 percentage points).

Dimon, who has led JP Morgan since 2006, said, “The US banking system is incredibly sound.”

He also dismissed cryptocurrencies as “a complete side show” and not worth the time invested by investors. This remark draws more attention after the price of virtual currency plummeted this year and the recent filing for bankruptcy of FTX, the world’s top 3 exchange. CEO Dimon is a representative cryptocurrency skeptic even within Wall Street. He criticized the rampant crime in the cryptocurrency industry and pointed out the need for regulators to focus.

New York = Correspondent Seul Kina Cho [email protected]

Source: 아시아경제신문 실시간 속보 by www.asiae.co.kr.

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