London
Cnn
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The CEO of JPMorgan Chase, Jamie Dimon, did not eliminate stagflation in the United States, citing the risks posed by the major budgetary deficits of the government, including in America, and the disturbance of global trade induced by American prices.
The term refers to a nightmare combination of economic stagnation or even a recession and an increase in inflation. It is a very delicate scenario for central banks to navigate: increase interest rates to slow down the risks of inflation stifling growth and pushing unemployment, but reduction in interest rates for the economy juice could stir up inflation.
“There is a chance that (we have) stagflation (in the United States),” Dimon told Bloomberg Television in Shanghai, China on Thursday. The billionaire stressed that he was not predicting but that “we must be prepared for something like that”.
“Global budget deficits are inflationary. I think that the reilitarization of the world is inflationary. Trade restructuring is an inflationary. And that’s not all an American thing,” he added.
Dimon’s comments come when President Donald Trump tries to adopt a “great and beautiful bill” by the congress which would reduce taxes for the Americans – a decision of the Office budget of the non -partisan congress would add billions of dollars to the federal deficit in the coming years.
Dimon told investors on Monday that he thought that the chances of stagflation are probably twice that of what the others have projected.
He also said that the complete effects of Trump’s prices had not yet been felt and that the markets have an “extraordinary quantity of complacency” in the face of these risks and others.
The American federal reserve has maintained its benchmark interest rate since January, because Trump’s erratic trade policy has injected enormous uncertainty in the greatest economy in the world – in turn causing Trump’s solid criticism that would like to see rates drop.
In his interview Thursday at the Summit in China of JPMorgan, Dimon did not agree with the idea that the Fed operated in a “Sweet Spot”.
“The (American) economy worked well … We have indeed been in a gentle landing,” he said, referring to the success of the Central Bank to reduce inflation without changing the economy in the recession. But he added: “It doesn’t tell you what the future will be.”
Dimon said the Fed “does the right thing” while waiting to see how the various inflationary factors, including the US budget, affect the US economy before deciding to reduce or increase rates.
“They must also follow the facts,” he said.
Last week, the Moody’s Downrada America’s Perfect Credit Score Moody’s Downrada Credit Agency, quoting its government debt burden in a hot air balloon.
