Jamie Dimon In Favor Of A Fed Rate Hike Pause, Sees 50% Odds Rates Hit 6%

One day after two Fed speakers spooked markets (which have a 15 millisecond memory and are constantly surprised by the exact same things they have priced countless times already) by saying something they have said on many previous occasions, namely that the Fed will have to hike above 5% and hold there for a long time (which, of course, a casual glance at the latest dot plot made very clear, even if the market keeps mocking the Fed's always wrong predictions), the second most influential voice in US finance after Powell, JPMorgan CEO Jamie Dimon, chimed in saying that while the Fed's rate hikes might need to go beyond what’s currently expected (markets currently expect the terminal rate at just below 5%), he’s in favor of a pause to see the full impact of last year’s increases.

There’s a 50% chance current expectations are correct in assuming the Fed will boost its benchmark rate to about 5%, and a 50% chance that the central bank will have to go to 6%, the JPM chief executive officer said in an interview aired Tuesday on Fox Business.

“I’m on the side that it may not be enough,” Dimon said. “We were a little slow getting going. It caught up. I don’t think there’s any harm done by waiting three or six months.”

Dimon spoke two days ahead of the December CPI data due at 830am ET on Thursday, and fourth-quarter results from top banks beginning Friday. Fed officials slowed their rate hikes last month, raising borrowing costs by 50 basis points after four consecutive 75 basis-point increases.

As Bloomberg notes, the wide-ranging interview took place Monday at JPMorgan’s annual health-care investment-banking conference in San Francisco — the first time it’s been held in person since before the pandemic. Dimon, who has been an advocate for employees coming into the office, said about 60% of JPMorgan’s workforce does so full-time and “about the rest” are there half the time.

On the economy, Dimon reiterated comments he made throughout much of last year, saying that while the consumer is still strong, heightened risks remain. He cited the impact of Russia’s invasion of Ukraine and quantitative tightening.

Unlike peers such as Goldman and Morgan Stanley, both of which have been aggressively laying off employees, JPMorgan remains “in hiring mode,” Dimon said, adding that he understands why firms are being cautious. He said wage pressure has waned a bit as attrition levels ease.

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