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The U.S. Federal Reserve will raise interest rates as many as six or seven times this year to fight inflation, not the three or four that the Fed has signaled, in the view of Jamie Dimon, CEO and executive chair of J.P. Morgan Chase, the U.S.’s biggest bank.
“I grew up in a world where Paul Volcker raised his rates 200 basis points on a Saturday night,” Dimon said in a 14 January earnings call cited by Yahoo!News.
“This whole notion that it’s somehow going to be sweet and gentle and no one’s going to be surprised I think is a mistake, but that does not mean we won’t have growth,” he predicted.
“At this point, it’s up to the Fed to thread the needle: slow inflation without stopping [economic] growth,” Dimon said, adding that he “has a lot of faith” in Fed chair Jerome Powell.
If Dimon’s forecast is accurate, short-term interest rates could leap to 2 percent by the end of this year, Hennessy Funds portfolio manager David Ellison told Yahoo!Finance Live.
J.P. Morgan’s share price sank by as much as 5 percent on 14 January as the bank reported a 14-percent drop in fourth-quarter profits.
Trading revenue was down by 13 percent for the period. The bank’s performance was rescued by a 28-percent gain in investment banking business during a stellar year for deals, as we reported in “Investment Banking Fees Boost Revenue at Big Banks” (20 Jul 2021).
For the quarter, the bank posted a $10.4-billion profit, or $3.33 per share.
PUBLISHER’S NOTE: As for Dimon’s faith in Jerome Powell and the Fed, the central bank lost its last shreds of credibility as it insisted inflation was “temporary,” then “transitory” for months, seconded by treasury secretary Janet Yellin, as prices steadily went up all around them. (See “Fed Holds Firm to Policy Despite 5-Percent Inflation,” 20 Jul 2021 and “Spotlight: Inflation Spreading,” 26 Oct 2021.)
As we noted in “The Powell Push: For Better or Worse” (7 Dec 2021), the Fed’s credibility has become another casualty of the COVID War.
TREND FORECAST: Should the Fed raise interest rates “six or seven” times in a single year it will crash the equity, real estate and retails markets. However, four hikes this year seems more and more likely as inflation speeds along.
As we have forecast, look for the Fed to sharply raise rates this year and next and then lower them before the presidential election in 2024. They did it before under Ronald Reagan when inflation was skyrocketing, and they will do it again.
We have made it clear that Washington is run by the Banksters. The former Fed Head, Janet Yellen, is now playing the role of U.S. Treasury Secretary, and she is a member of the Biden team which is a front for the money powers in charge.
Therefore, they will dramatically lower interest rates to pump up the economy prior to Election Day.