Jamie Dimon has been CEO of JPMorgan since 2005.Jim Watson/AFP via Getty Images
JPMorgan boss Jamie Dimon says markets are in for a lot of volatility in 2022. He said he’d be surprised if the Federal Reserve raised interest rates only four times. Yet Dimon said the US economy is in good shape and is set for very strong growth this year. Jamie Dimon has said financial markets are in for a rocky ride in 2022, with the JPMorgan CEO saying he’d be surprised if the Federal Reserve hiked only four times.
Dimon told CNBC Monday that he’s “expecting that the market will have a lot of volatility this year as rates go up.”
He said higher interest rates would cause investors to “redo projections and look at the effective interest rate and businesses differently than they did before.”
Dimon, who has run the US’ biggest bank since 2005, said the Fed could well hike rates more aggressively than many expect over the coming year. He said he expects inflation to remain well above the central bank’s 2% target by the end of 2022.
“I’d personally be surprised if it’s just four increases,” he told CNBC’s Bertha Coombs on “The Exchange.” “I think that four increases of 25 basis points is a very, very little amount and very easy for the economy to absorb.”
Goldman Sachs on Monday said it now expects the Fed to raise rates four times this year, after the US unemployment rate fell in December. Deutsche Bank is among the other lenders penciling in four rate rises.
Stock markets have been roiled in early 2022 by expectations that the Fed will repeatedly hike rates and start reducing its balance sheet, bringing to an end the huge support that the central bank provided the economy and markets during the coronavirus crisis.
Read more: JPMorgan markets guru Marko Kolanovic shares his 20 top investing recommendations to maximize returns in 2022
The benchmark S&P 500 is down more than 2% year-to-date. But tech stocks – which now look less attractive as interest rates rise – have been the worst hit, with the tech-heavy Nasdaq 100 index down 4.3% so far this year.
Dimon said the Fed has a very difficult task ahead of it to bring down inflation without whacking the economy and markets. “It’s gonna be a little bit like threading a needle,” he said.
Yet the JPMorgan boss said the US economy is in a very strong position going into 2022, with consumers having built up savings during COVID-19 and employment and wages rising.
“We’re going to have, what? The best growth we’ve ever had this year, I think since maybe sometime [around] the Great Depression. And so next year will be pretty good too,” he said.
“The consumer balance sheet has never been in better shape,” Dimon said. “Home prices are up, stock prices are up. Jobs are plentiful, wages are going up, and that all tells you what’s gonna happen in the future.”
However, Dimon said a strong economy doesn’t necessarily mean an easy ride for stocks. “The market is different, [it] can have its own fluctuations unrelated to the economy,” he said.