World’s prime funding banker raises alarm over US recession: JP Morgan boss Jamie Dimon warns over inflation and Ukraine struggle
One of the world’s best-known bankers has warned a recession within the US is ‘completely’ attainable.
Jamie Dimon, the chief govt of JP Morgan, mentioned inflation and the struggle in Ukraine had been ‘highly effective forces’ threatening the financial system.
He cautioned that market volatility was inevitable as America’s central financial institution, the Federal Reserve, tightens its quantitative easing programme and shrinks its steadiness sheet.
Warning: Jamie Dimon (pictured with spouse Judith) mentioned market volatility was inevitable because the Fed tightens its quantitative easing programme and shrinks its steadiness sheet
Dimon, 66, mentioned: ‘The Fed must attempt to handle this financial system and attempt to get to a mushy touchdown, if attainable.
‘I’m not predicting a recession. Is it attainable? Absolutely.’
His feedback got here as JP Morgan unveiled its first-quarter outcomes. Profits had been down 42 per cent on final year, to £6.9billion, because the deal-making growth started to sluggish.
Central banks all over the world are below mounting strain to step up the battle in opposition to inflation, which has hit a 30-year excessive of seven per cent within the UK, a report excessive of seven.5 per cent within the eurozone, and a 41-year excessive of 8.5 per cent within the US.
Otmar Issing, the European Central Bank’s (ECB) chief economist when it was created in 1998, slammed the ‘misguided’ response of the financial institution to the inflation spike, telling the FT: ‘Inflation was a sleeping dragon; this dragon has now awoken.’
Against this backdrop, the Bank of England seems to be set early subsequent month to boost charges for a fourth time since December.
Ruth Gregory, senior UK economist at Capital Economics, mentioned: ‘We assume charges will rise from 0.75 per cent to at the very least 2 per cent subsequent year.’
The US Federal Reserve is ready to behave in May having raised charges for the primary time in three years final month. The ECB has but to boost charges.
‘The ECB has contributed massively to this lure during which it’s now caught as a result of we’re heading in direction of the danger of a stagflationary surroundings,’ mentioned Issing.
James Bullard, president of the St Louis department of the US Federal Reserve, mentioned it should be extra aggressive and lift charges far larger than a ‘impartial’ stage – estimated to be round 2.5 per cent.
‘There’s a little bit of a fantasy, I feel, in present coverage in central banks,’ he informed the FT. ‘Neutral is just not placing downward strain on inflation.’
Pointing to US costs rising by 8.5 per cent, he added: ‘This simply underscores the urgency.
‘The Fed is behind the curve and must get transferring.’