“‘I think they [The Fed] did the right thing to raise rates rapidly and I think they’re kind of right to pause here a little bit and see what happens. But I suspect that they may not be done.Inflation is a little stickier than people think.And the fiscal and monetary stimulus of the last several years is more than people think. Unemployment is very low. We’ll see.’”
That’s JPMorgan Chase & Co.
JPM,
Chief Executive Jamie Dimon, backing up the Federal Reserve’s decision to keep interest rates unchanged for now.
In an interview with Yahoo Finance, Dimon said it’s possible the U.S. central bank could raise rates by an additional 25, 50 or 75 basis points, but he said it’s not a prediction, just part of being ready for a range of outcomes as he runs the largest bank in the United States.
“I just think there’s a higher chance probably than other people think,” Dimon said. “I don’t look at it as a prediction. I look at that more like risk management. Don’t rule it out when you look at how you manage your company that rates could go a little bit higher.”
If the yields on long bonds of 10-year duration or more rise to 7% of 8%, the bank is ready for that outcome, Dimon said.
“We run the company so that if there is 7% or 8% long bond rates, we’re going to be fine,” Dimon said. “We’re not guessing for it, but we stress for it.”
Dimon cited pressure on yields on The benchmark 10-year Treasury
BX:TMUBMUSD10Y
to go up further.
He also cited a metaphor popularized by Berkshire Hathaway Inc.’s
BRK.A,
Warren Buffett about recessions: They are like the tide going out on the beach and you can see who’s not wearing a bathing suit.
“You’re gonna see quite a few people swimming naked,” Dimon said. “They can’t take the double whammy of stagflation or bad real estate or something like that. When I talk to small business, I tell people to be prepared.”
Dimon said he’s been reading four to five newspapers a day for the past 30 years.
“Study everything. Learn, learn, learn,” he said. “Don’t get rigid in how you think.”
Dimon’s comments came as the bank held at Make Your Move Summit for small businesses in Frisco, Texas.
Also read: Jamie Dimon and family selling 1 million shares of JPMorgan stock for ‘financial diversification’ purposes
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