Ahead of the Fed’s 75 basis point rate hike, JPMorgan CEO Jamie Dimon told lawmakers to “be prepared for the worst.”
The Fed’s third consecutive rate hike comes after monthly inflation rose unexpectedly last month, indicating that aggressive rate hikes will last longer than expected.
By raising interest rates, the central bank is trying to slow down consumer spending. But it hopes to avoid a recession in the process or achieve a so-called “soft landing.”
Fed rate hike:Fed is raising interest rates by 0.75 percentage points to curb inflation, and sees aggressive hikes ahead. What does it mean to you?
Are we stuck with blistering inflation?High prices leave experts wondering when we’ll see relief
Dimon, who runs the country’s largest consumer bank, said there is only a “small chance”. Testifying before the House Financial Services Committee, he warned that if there is a looming recession, it may not be mild due to the economic uncertainty from the ongoing war in Ukraine. Dimon testified along with the CEOs of Bancorp, PNC, Citigroup, Bank of America, Truist and Wells Fargo.
When asked by Rep. Bill Posey, R-Fla., whether Congressional spending was responsible for the high inflation, Dimon said, “I don’t think you can spend $6 trillion without expecting inflation.”
However, he said he is not critical of the actions lawmakers have taken to restart the economy that had been shut down by the pandemic.
“I don’t like to cry over spilled milk,” he said. “Let’s do the things we need to do to fix all that and then move on and grow the economy, which is the best way to reduce inflation and help all our citizens.”
Biden and inflation:Biden’s $1.9 billion stimulus fueled inflation, critics say. But others claim it saved the economy.
A recession is now likely in 2023:This is what can cause a sharp downturn in the economy
In June, Dimon shocked markets when he told investors to brace themselves for an economic “hurricane” at a corporate conference.
Clarifying that a hurricane-like economic situation is not a given but a possibility, Dimon urged lawmakers to prepare for the worst “so that we take the right actions if and when that happens.”
Elisabeth Buchwald is a personal finance and markets correspondent for USA TODAY. You can ffollow her on Twitter @BuchElisabeth and sign up for our Daily Money newsletter here