MIAMI, Feb 8 (Reuters) – The chief executive of JPMorgan Chase & Co. (JPM.N), the biggest U.S. bank, cautioned against declaring victory against inflation too early, warning the Federal Reserve could raise interest rates above the 5% mark if higher prices ended up “sticky.” Jamie Dimon’s warning came after Federal Reserve officials said more rate rises are on the cards, although none were ready to suggest that January’s hot jobs report could push them back to a more aggressive monetary policy stance.
In reference to inflation, Dimon said “people should take a deep breath on this one before they declare victory because a month’s number looked good.”
“It’s perfectly reasonable for the Fed to go to 5% and wait a while,” Dimon said. But if inflation comes down to 3.5% or 4% and stays there, “you may have to go higher than 5% and that could affect short rates, longer rates,” he said. From a peak of nearly 7% in June, the Fed’s preferred measure of inflation stood at 5% in December – well above its 2% target but heading steadily downward. In a wide-ranging interview with Reuters, Jamie Dimon warned stricter regulation of credit card fees could prompt lenders to extend less credit. He also said he planned to visit China, saying it was important to maintain relations there. Wall Street giants, including Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N), have cut thousands of jobs as a worsening economic outlook depressed dealmaking, while mortgage lenders have also trimmed staff. NN: Its not time to break out the Champaign. In fact soon inflation will be rising again….. Won’t that be fun!!