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14 Oct, 2022 12:56

JPMorgan Chase CEO warns of major drop in US stock market

Jamie Dimon raises doubts over Fed’s ability to control drifting economy without bringing on recession
JPMorgan Chase CEO warns of major drop in US stock market

The US stock market will drop another 30% due to a severe recession that is looming, according to the boss of Wall Street banking giant JPMorgan Chase, Jamie Dimon, as cited by Bloomberg.

Dimon expects the Federal Reserve to raise the key interest rate higher than the 4 - 4.5% level many analysts have predicted so far, due to persisting inflation stemmed from the lasting effects of the pandemic and soaring energy prices.

“I don’t know if it could be a soft landing - I don’t think so, but it might,” Dimon said at a conference in Washington DC on Thursday, according to the agency. 

“In a tough recession, you could expect the market to go down another 20% to 30%,” he added. 

Core inflation, excluding food and energy, saw a year-on-year surge of 6.6% in September, marking the highest in four decades, data released Thursday showed. The consumer price index, a key inflation barometer, jumped by 8.2% in September relative to a year earlier. 

The US Federal Reserve has boosted its key short-term rate by three percentage points since March, the fastest pace of hikes since the early 1980s. The hikes are aimed at cooling inflation by slowing the economy, as borrowing costs for mortgages, auto loans and business loans are growing.

The Fed is on track to increase interest rates by 0.75 of a percentage point at its next meeting that is scheduled for November 1.

Earlier this week, Dimon said that he expected US and global recessions by the middle of next year, citing such drivers as rising interest rates, persistent inflation and a lasting military conflict between Russia and Ukraine.

For more stories on economy & finance visit RT's business section

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