NEW YORK–The CEO of the nation’s largest bank is predicting an “economic hurricane” is coming due to thewar in Ukraine, rising inflation pressures and interest rate hikes from the Federal Reserve.
“Right now it’s kind of sunny, things are doing fine. Everyone thinks the Fed can handle this,” said Jamie Dimon, CEO of JPMorgan Chase, during a Bernstein conference, according to CNN Business. “That hurricane is right out there down the road coming our way. We just don’t know if it’s a minor one or Superstorm Sandy. You better brace yourself.”
Dimon said JPMorgan Chase is preparing for a “non-benign environment” and “bad outcomes,” the report added.
According to Dimon, the economy is “distorted” by inflation, and he is further worried the Fed is starting to unwind its bond portfolio, a process known as quantitative tightening, at the same time it is raising interest rates, CNN Business reported.
Dimon said the market is unprepared for that combination and suggested people will be “writing about [this] in history books for 50 years.”
Dimon told the meeting the Fed is in a bind as it must raise interest rates due to surging housing prices and other inflation pressures. He stressed that he still thinks the U.S. banking system is in “great shape” and can withstand these challenges, CNN Business reported.
Clouds May ‘Dissipate’
CNN Business noted Dimon’s more cautious outlook comes just a few days after he sounded a little more upbeat about what’s next for the markets and the economy.
Speaking at an analyst meeting at the end of May, Dimon said that there were “big storm clouds” on the horizon for the economy but expressed hope that they may “dissipate,” the report stated
“If it was a hurricane, I would tell you that,” Dimon said at the analyst meeting, adding that current conditions also aren’t like the “tsunami” that banks faced in 2007 and 2008 when the mortgage market was melting down and several large financial institutions collapsed, according to CNN Business.
Dimon added he is also worried about the conflict in Ukraine and the impact it will have on oil prices, predicting on Wednesday that it’s in the cards for crude prices to eventually spike as high as $150 to $175 a barrel.
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