JPMorgan CEO Jamie Dimon suspects Fed 'may not be done' raising rates amid 'stickier' inflation

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JPMorgan Chase (JPM) CEO Jamie Dimon said it remains possible the Federal Reserve could raise interest rates an additional 75 basis points due to "stickier" inflation, warning businesses should be prepared for such a worst-case scenario.

Speaking just hours after the Fed's decision on Wednesday to hold interest rates in a range of 5.25%-5.50%, Dimon said "I think they're right to pause here and see what happens," adding: "I suspect that they may not be done."

Dimon spoke with Yahoo Finance Live in an exclusive interview from JPMorgan Chase's 'Make Your Move Summit' in Frisco, Texas.

Regarding the magnitude of future rate hikes from the Fed, Dimon said, "Maybe 25, 50, to 75 [basis points] more."

"And I'm not predicting that," Dimon said, "I just think there's a higher chance than probably other people think."

JPMorgan CEO Jamie Dimon (R) sits down with Yahoo Finance Live in Frisco, Texas on Wednesday, November 1, 2023. (Source: Yahoo Finance)

In its statement on Wednesday, the Fed upgraded its assessment of the economy to "strong" in the third quarter from "solid" in September. This change came after third quarter GDP data published last week showed growth clocked in at a whopping 4.9% annualized rate over the summer months, which was driven in large part by strong consumer spending.

Dimon said Wednesday the Fed was right to pause, though the JPMorgan chief said, "I think there's a chance that inflation is just a little stickier than people think and their fiscal and monetary stimulus in the last several years is more than people think. Unemployment is very low. We'll see."

Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards

Dimon has been warning for months about the possibility that rates could still surge and that this move could expose those in the financial world who took too much risk when rates were low.

"This may be the most dangerous time the world has seen in decades," Dimon said in the firm's earnings release on Oct. 13.

He is particularly worried about the effects of the Fed's quantitative tightening, which is increasing the supply of bonds while foreign governments slow their pace of buying. That, he said, could apply even more pressure on 10-year Treasury yields.

"At one point," he said Wednesday, "it will rattle the markets."

The big bank that appears to be best positioned for an era of higher rates is JPMorgan, which signaled as early as 2020 that it wasn’t willing to take a lot of risk with an influx of deposits that flooded into the banking system during the early days of the pandemic.