JPMorgan Chase & Co. CEO, Jamie Dimon, in a recent interview, warned that the world might not be prepared for a scenario in which the U.S. Federal Reserve (FED) could raise interest rates to 7%.
During a JPMorgan investor summit in Mumbai, Dimon emphasized that rapidly increasing interest rates could create stress on the system.
“If they are going to have lower volumes and higher rates, there will be stress in the system.”
Dimon Draws from Buffett’s Wisdom in Discussing Rising Interest Rates
Jamie Dimon invoked the famous saying of renowned investor Warren Buffett, “You only find out who is swimming naked when the tide goes out.” He used this analogy to highlight the potential economic challenges that might arise from increasing interest rates.
For investors and economists, changes in interest rates, especially a jump from 5% to 7%, can have a greater impact than a shift from 3% to 5%. According to Dimon, persistent inflation issues might force the Fed to hike interest rates even further. This could result in higher borrowing costs and further adverse effects on the global economy.