JPMorgan CEO Jamie Dimon: Cutting The Fed's Interest Rate Is Not A Solution

Jamie Dimon; cutting Fed interest rates is not a solution (Photo; Doc. Nypost)

JAKARTA - JPMorgan CEO Jamie Dimon gave a sharp and different view regarding the Federal Reserve (The Fed)'s move to lower interest rates. In the midst of many who consider this cut in interest rates a positive signal for economic recovery, Dimon actually reminded that there are deeper and more complex economic challenges ahead.

In a conference at the University ofturbation, the day before the Fed lowered interest rates by 50 basis points, Dimon emphasized that this cut should not be exaggerated too much. According to him, whether the cut in interest rates reaches 25 or 50 basis points, the impact on the economy will not be significant. That doesn't mean much," said Dimon, stressing that the real issue is not a change in interest rates, but a wider economic power.

Despite supporting the loose monetary policy implemented by the Fed and praising Jerome Powell's efforts, Dimon still highlighted the threat of inflation and stagflation. According to him, inflation is still a major unsolved issue, and despite indications of a decline in inflation, the risk of stagnation in combination of high inflation and stagnant economic growth remains.

Reporting from Bitcoin.com News, Dimon warned that although cut interest rates may provide a little concession for markets, larger economic problems such as budget deficits and increasing government spending could trigger a spike in inflation again. With this pressure, he predicts that interest rates could rise to 7%, which of course will have a major impact on the United States economy.

One of the most interesting things about Dimon's statement is his attitude that rules out the debate surrounding whether the US economy will experience a soft landing'' or hard landing''. The soft landing refers to a scenario where the economy manages to slow down without triggering a recession, while the hard landing refers to a more severe recession potential. Dimon argues that too much focus on this landing actually distracts from the main issues that must be addressed immediately. Most of us have gone through all that, it's not very important,'' he stressed.

Behind all these concerns, Dimon also reminded that although inflation seems to have subsided, the US economy has not completely dropped out of the danger zone. He predicts that the possibility of a recession is still significant, especially if the government fails to address fiscal risks such as deficits and excessive spending.