Jamie Dimon Warns To Be Ready For Interest Rates At 7%

Interest rates could rise to 7% and the world may not be prepared for it, JPMorgan Chase CEO Jamie Dimon said in an interview with Times of India.

"First of all, interest rates went to zero. Going from zero to 2% was almost no increase. Going from zero to 5% caught some people off guard, but no one would have taken 5% out of the realm of possibility. I am not sure the world is prepared for 7%," according to excerpts of the interview published but the newspaper Tuesday.

Dimon said in the interview that he's urging his clients to be prepared for stress.

"I ask people in business, 'are you prepared for something like 7%?' The worst case is 7% with stagflation. If they going to have lower volumes and higher rates, there will be stress in the system," Simon said, according to Times of India.

The Federal Reserve maintained the US benchmark rate in the range of 5.25% to 5.50% on Sept. 20, the highest level in 22 years. Projections in the Fed's dot plot, which accompanied the announcement, showed the likelihood of one more hike this year.

"Inflation is still too high, and I expect it will likely be appropriate for the Committee to raise rates further and hold them at a restrictive level for some time to return inflation to our 2% goal in a timely way," Fed Governor Michelle Bowman said in a speech Friday. "I see a continued risk that energy prices could rise further and reverse some of the progress we have seen on inflation in recent months."

Annual US inflation accelerated to the 3.7% in August from 3.2% in July, pressured mainly by gas prices. The Fed has two more monetary policy meetings in 2023, on Nov. 1 and Dec. 13.