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GB News
GB News
12 Mar 2024


NextImg:Recession warning as economic downturn in US ‘not off the table’, JP Morgan boss claims

The prospect of a recession in the US is not “off the table” but the Federal Reserve should wait before cutting interest rates, according to the head of JP Morgan Chase.

Jamie Dimon, the investment banking company’s CEO, made the comments while appearing at the Australian Financial Review Business Summit in Sydney through video link.R

“The world is pricing in a soft landing, at probably 70 per cent to 80 per cent,” the chief executive explained.

“I think the chance of a soft landing in the next year or two is half that. The worst case would be stagflation.”

According to Dimon, the usual indicators surrounding the economy have been distorted following the pandemic and he takes then with a “grain of salt”.

As well as this, the JP Morgan boss said that the Fed should wait for further clarity before deciding to slash interest rates.

Investor worried and US economy graph pointing down

The CEO of JP Morgan is issuing a recession warning

GETTY

The central bank has raised the Federal Funds Rate to 5.25 per cent and 5.50 per cent which has hiked repayments for borrowers and mortgage holders.

Interest rates have been raised in the US’ ongoing fight with inflation with the Consumer Price Index (CPI) sitting at 3.2 per cent as of the 12 months to February 2024.

While this remains higher than the Fed’s desired two per cent target, it is a far cry from the heights seen during the pandemic.

According to JP Morgan Chase’s CEO, the central bank must be cautious in implemented any cuts to interest rates.

Mr Dimon added: ““They can always cut quickly and dramatically. Their credibility is a bit at stake here.

“Unemployment in the United States is very low at the moment, wages continue to go up.”