The CEO of JP Morgan, Jamie Dimon, has spoken out against Donald Trump’s attacks on Federal Reserve Chair Jerome Powell, warning that they could undermine the independence of the central bank and ultimately lead to higher interest rates and inflation. Dimon expressed his “enormous respect” for Powell, who has been the target of a criminal investigation by the US Department of Justice over a $2.5 billion renovation of the Fed’s headquarters. Powell has denounced the investigation as punishment for not setting interest rates in line with Trump’s wishes.
Dimon’s comments were echoed by central banks around the world, with ten central bank governors issuing a joint statement in support of Powell and the Fed’s independence. Trump has repeatedly criticized Powell for not cutting interest rates fast enough, despite appointing him as Fed Chair in 2018. The US President has claimed he is unaware of the DoJ investigation, but has continued to attack Powell, calling him a “bad Fed person” who has “done a bad job”.
Dimon warned that Trump’s attacks on the Fed could have unintended consequences, including higher inflation expectations and interest rates. He also expressed concerns about the potential impact of Trump’s proposed 10% cap on credit card interest rates, which could limit access to credit for consumers and have negative consequences for the economy. JP Morgan’s chief financial officer, Jeremy Barnum, also warned that the cap could lead to people losing access to credit, particularly those who need it most.
Trump responded to Dimon’s comments by defending his opposition to Powell and attacking the JP Morgan CEO. He claimed that Dimon probably wants higher interest rates because it would be beneficial to his business. The spat between Trump and Dimon highlights the ongoing tensions between the US President and the financial sector, with Trump’s unpredictable policies and tweets continuing to cause uncertainty and volatility in the markets.
Despite the challenges posed by Trump’s policies, Dimon expressed confidence in JP Morgan’s ability to navigate the geopolitical risks and continue to serve its clients. The bank released its fourth-quarter earnings results, which showed a 7% drop in profits to $13 billion, largely due to a one-off cost associated with its takeover of a credit card partnership with Apple. Dimon said that the bank would focus on building its business and dealing with the politics and issues that arise, while also doing contingency planning for potential risks such as the credit card interest rate cap.