JPMorgan Chase CEO Jamie Dimon believes interest rates could go higher than the Federal Reserve is currently forecasting as inflation remains stubbornly high.
“I actually think rates are probably going to go past 5%… because I think there’s a lot of underlying inflation that’s not going away anytime soon,” Dimon said on CNBC’s “Squawk Box” on Thursday World Economy Forum in Davos, Switzerland.
To counter rising prices, the Federal Reserve has raised its benchmark interest rate to a target range of 4.25% to 4.5%, the highest level in 15 years. The expected “final rate,” or the point at which officials expect rate hikes to end, was set at 5.1% at their December meeting.
The consumer price index, which measures the cost of a broad basket of goods and services, rose 6.5% year on year in December, marking the smallest annual increase since October 2021.
Dimon said the recent slowdown in inflation was due to temporary factors such as a drop in oil prices and a slowdown in China due to the pandemic.
“We’ve had the benefit that China has slowed down, the benefit that oil prices have come down a bit,” Dimon said. “I think oil gas prices are likely to go up over the next 10 years… China will no longer be deflationary.”
The series of aggressive rate hikes has fueled fears of a recession in the US. Central bankers still feel they have room to raise rates as the labor market and consumers remain strong.
The JPMorgan chief said if the US suffers a mild recession, interest rates would rise to 6%. He added that it is difficult for anyone to predict economic downturns.
“I know there will be recessions, ups and downs. I really don’t spend that much time worrying about it. I worry that poor public policy is hurting American growth,” Dimon said.