(The Epoch Times)—JPMorgan CEO Jamie Dimon said on Thursday at an Irish foreign ministry event that U.S. financial markets were underestimating the possibility of a Federal Reserve interest-rate hike, a prospect he described as a “cause for concern.”
According to the latest meeting summary of the policy-making Federal Open Market Committee (FOMC), Fed officials agree on interest rate cuts, but are undecided on when it will happen. The benchmark federal funds rate—which influences business, consumer, and government borrowing costs—was left at a target range of 4.25–4.5 percent.
Some of the Federal Reserve governors echoed Chairman Jerome Powell’s view to wait for more tariff-related economic data before deciding on cuts.
However, while President Donald Trump has criticized Powell for not reducing rates, Dimon’s estimation of the possibility of a further rate increase was “higher” than anybody else’s, according to the CEO.
“The market is pricing a 20 percent chance. I would price in a 40–50 percent chance,” he said.
“I would put that as a cause for concern.”
Dimon said his calculation of a higher probability was based on price pressures, citing tariffs, the U.S. government’s immigration policies, and its budget deficit as inflationary.
Inflation in the producer price index inched a bit higher, to 2.6 percent from the prior month’s 2.5 percent, indicating economic resilience despite the Trump administration’s dynamic tariff policies.
Inflation has steadily remained at or below the 2.4 percent mark since March.
Regarding tariffs, the Trump administration has been sending out letters to numerous countries over the past days in an attempt to finalize some agreements before the Aug. 1 deadline.
Typically, when tariffs are implemented across the board on all trade partners, price increases are inevitable as sellers offset costs by transferring some of it onto customers.
The Trump administration is trying to mitigate an increase in prices by incentivizing manufacturers to set up shop in the country, and by removing longstanding trade barriers that have hindered U.S. access to foreign markets, which boosts the domestic economy.
The administration’s policies have, thus far, sustained prices and boosted employment in the economy.
U.S. jobless claims fell to the lowest levels in seven weeks, according to the latest numbers from the Department of Labor.
“The June jobs report is like a summer blockbuster—plenty of action and a surprise twist. Despite tariffs, [Washington] D.C. drama, and global headwinds, the U.S. labor market just pulled off a better-than-expected performance,” Gina Bolvin, president of Bolvin Wealth Management, said in an email to The Epoch Times.
These numbers, Bolvin says, suggest that “Main Street is still marching forward—even if Wall Street keeps glancing nervously at the Fed.”
However, Dimon cited the restructuring of global trade and global demographics as “kind of inflationary,” and described real-time data on the U.S. economy as “totally impossible to read.”
“Unfortunately I think there is complacency in markets, and (they are) a little desensitized,” he said.
The S&P 500 Index has recovered all losses following the April tariff announcement fall, and is trading at $6,258 as of 12:35 p.m. ET, July 11, an increase of more than 6 percent from the start of the year.
Reuters and Andrew Moran contributed to this report.
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Author: Naveen Athrappully
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