JPMorgan's Jamie Dimon doesn’t see more Fed rate cuts unless inflation drops

JPMorgan CEO Jamie Dimon said on Monday he doesn’t see the U.S. Federal Reserve cutting interest rates further unless inflation drops. The tech executive also revealed that he isn’t concerned about stablecoins threatening the banking sector.

Dimon spoke at CNBC’s TV18 and stated that if inflation persists, it’s going to be hard for the Fed to cut rates further. He also argued that inflation remained stagnant at 3%, adding that he could give arguments for why it will go up and not down.

JPMorgan’s CEO also hopes for decent economic growth and a rate cut instead of the central bank cutting rates due to a recession.

Fed expects two more rate cuts in 2025

JPMorgan’s Dimon expectation has drifted away from the rest of the market’s expectation of multiple rate cuts. The CME FedWatch Tool shows that markets expect up to two rate cuts over the remaining 3 months of the year. 

The central bank cut rates by a quarter basis point on Wednesday for the first time this year. Data reveals that markets expect another 25 bps cut during the Fed’s meeting in late October and another in early December. The Fed also projects roughly two more cuts to come before the end of the year, with another possibly in 2026. 

Cuts have historically been a boon for crypto markets, since cheaper borrowing allows investors to bet on riskier assets. Last week’s rate cut led the Bitcoin price to rise to over $117,500 for the first time in over a month.

According to the latest U.S. inflation data released on September 11, U.S. inflation surged by 0.4% in August. Inflation also increased by 2.9% over the last 12 months, above the central bank’s target inflation of 2%.

Cryptopolitan previously reported that the Fed’s Alberto Musalem, president of the Bank of St. Louis, believes there’s limited room for more rate cuts despite a rise in inflation. He argued that the little room left for further easing will ensure policy won’t become overly accommodative.

Musalem also maintained that he expects risk inflation to remain above the Fed’s 2% target. He argued that he would champion another cut if the labor market deteriorates. 

Atlanta Fed President Raphael Bostic also believes there’s little room for more rate cuts this year. He said Monday that he expected only one cut this year in his economic projects. The banker maintained that he’s more concerned about inflation, which has remained high for a long time. Musalem also reiterated that keeping long-term interest rates stable is more important.

JPMorgan’s Dimon says he’s not worried about stablecoins

JP Morgan’s Dimon mentioned that he was not particularly worried about stablecoins, which have transitioned to become a key policy issue for banks after Congress passed laws regulating the tokens in July. He argued that JPMorgan and other banks in the sector should be on top of stablecoins and understand them.

“There’ll be people who want to own dollars through a stablecoin outside the U.S., from bad guys to good guys to certain countries where you’re probably better off having dollars and not putting it into the banking system.”

–Jamie Dimon, CEO at JPMorgan.

The bank’s executive maintained that JPMorgan is involved in dollar-backed digital assets. JPMorgan’s CEO added that the banking sector is also considering where it should have a consortium to launch a stablecoin. He argued that he’s not sure central banks need to use the token among themselves; that’s why it’ll develop over time.

The banking industry has retaliated against stablecoins, urging Congress to tighten up the laws around the token. Citi’s Ronit Ghose has warned that there are loopholes allowing stablecoin issuers and their affiliates to pay interest or yield on stablecoins.

Ghose argued that paying interest on stablecoin deposits could spark a wave of bank outflows similar to the money market fund boom of the 1980s. The bank revealed that the incident led to funds surging from about $4 billion in 1975 to $235 billion in 1982.

If you're reading this, you’re already ahead. Stay there with our newsletter.