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Jamie Dimon says inflation is worse than people think, and the market is too optimistic about a soft landing

CNBC/Jamie Dimon

  • Inflation could be higher for longer than people think, JPMorgan CEO Jamie Dimon told Bloomberg TV.

  • Markets are too optimistic about inflation, interest rates and the U.S. economy, Dimon said.

  • He added that the rates would likely be higher than people would think.

Markets are underestimating the likely sustainability of inflation as a range of factors keep prices rising, JPMorgan CEO Jamie Dimon told Bloomberg TV.

“I think underlying inflation may not go away as people expect,” he told the JPMorgan Global Markets Conference. He added: “I think there are a lot of inflationary forces ahead that may keep inflation a little bit higher than people expect.”

Looking to the future, Dimon cited examples such as the transition to green energy, infrastructure build-out and geopolitical remilitarization as worrying sources of accelerating price growth.

Upcoming policy changes could also play a role here: increasing trade restrictions or continued fiscal overspending could boost price momentum.

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This is a point that Dimon continues to reiterate despite the bullish market, as investors continue to trade on the assumption that declining inflation will allow interest rates to eventually fall.

For Dimon, this is “a lot of happy talk,” he said. According to him, the chance that monetary policy will remain unchanged – or that it will be tightened – is greater than most expect. Moreover, hopes for a soft landing should be half of what they are now, he added.

But the positivity was clear in Bank of America’s latest Global Fund Manager Survey. In fact, Tuesday’s report marked the highest optimism among investors since late 2022, driven by increasing confidence in rate cuts this year.

Dimon’s opposition is ongoing. In his annual letter to JPMorgan shareholders, published last month, he expressed a similarly gloomy outlook on inflation, interest rates and the path of the economy. Geopolitical tensions also worry the bank, he said at the time.

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But recently he has issued soothing rhetoric when it comes to at least one global competitor: China. On this front, Dimon has argued that the US should not shy away from competing with Beijing, despite the country’s growing ties with Russia.

“Engagement is the right thing to do,” he told Bloomberg. “China is not a natural enemy of the United States; they have a lot of their own problems. So as far as I’m concerned, we can work together as best we can.”

Read the original article on Business Insider

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