Link to the article: https://www.cnbc.com/2023/04/14/jamie-dimon-warning-on-rates-it-will-undress-problems-in-the-economy.html
According to JP Morgan (Ticker: JPM) CEO, Jamie Dimon, investors and businesses should plan for interest rates to remain higher for longer than expected by the market.
During his conference call with the analysts, he warned that higher rates would undress problems for those who are exposed to floating rates and to refinancing risks, referring to loans that reset the market rates.
He also said that a benchmark rate closer to 6% would impact the economy. As the federal funds rates are ranging from 4.75% to 5% and the Fed is expected to have a quarter-point rate hike, would the target rates reach close to 6%? Inflation would be expected to come down then, but would it reach the 2% target rate and also at what cost of the economy?
2 comments:
The FED's fight against inflation is due to be more aggressive as it is expected that they will raise rates again. While domestically we are contracting our own economy through monetary policy, we can see that foreign nations are closing the power the dollar has in trade and everyday endeavor. Many nations and even some EU countries have stated that they have lost faith in the dollar which is a much larger concern than the domestic problem that we have.
I think a lot of people forget the fact that this process of raising rates it to lower inflation to the Fed's target rate of 2%. As we've seen for the past year now, this is not a quick process. People should expect the Fed to keep raising rates until this goal is met, no matter the time frame.
Post a Comment