- JP Morgan Chase CEO Jamie Dimon said the US Federal Reserve should delay cutting interest rates until the second half of the year.
- He said the Fed should wait for more data before cutting rates.
- Despite the market’s optimism for a soft landing, Dimon says there’s a 65% chance of a recession in the next two years.
The US Federal Reserve should wait until the second half of the year before cutting interest rates, JP Morgan Chase CEO Jamie Dimon said on Tuesday.
“I think they have to be data-dependent. If I were them, I would wait,” said Dimon at the Australian Financial Review Business Summit.
After all, “they can always cut it quickly and dramatically,” said Dimon, who dialed remotely into the event. “Their credibility is a little bit at stake here. I would even wait past June and let it all sort out.”
Dimon’s caution is based on his view that even though the US economy is “kind of booming” right now, there’s still a risk it could enter a recession.
The Fed has cut interest rates multiple times since March 2022 to cool high inflation while trying to steer the economy into making what’s known as a “soft landing” — where the economy cools enough to bring inflation down without falling into a recession.
The US economy appears resilient even after numerous rounds of interest rate hikes. Job growth remains robust and consumer spending is still strong.
So, the market is pricing in a 70% to 80% chance of a soft landing. Dimon, however, said he thinks “the chance of a soft landing in the next year or two is half that.”
Dimon also thinks the probability of a US recession in the next one to two years is about 65%.
“That’s almost off the table if you look at people’s projections. I wouldn’t take it off the table yet,” said Dimon, referring to the possibility of a downturn.
