JPMorgan CEO Jamie Dimon warns inflation and interest rates may stay higher for longer than expected

JPMorgan Chase CEO Jamie Dimon warned that inflation and interest rates may stay higher for longer than expected, even as three of the biggest US banks posted solid quarterly results.

“There has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world,” Dimon said. “Therefore, inflation and interest rates may stay higher than the market expects.”

Inflation decelerated in June for the first time in four years, a welcome change many hope will push Federal Reserve Chair Jerome Powell — who has hinted at rate cuts — to lower interest rates sooner.

The consumer price index — which measures the costs of US goods and services — dipped 0.1% versus a month earlier, according to the Labor Department. It rose 3% versus a year ago, the slowest rate in three years after the pandemic spurred a market crash and inflation surge.

On Friday, the producer prices index, ticked up more than expected in June amid a rise in the cost of services, the Labor Department said. The PPI rose 0.2% last month after being unchanged in May. Economists polled by Reuters had forecast the PPI rising 0.1%.

The stock market shook off any concerns voiced by Dimon or the latest inflation gauge. The Dow soared more than 400 points and hit all-time high of 40,257.24 before closing at 40,000.90.

Powell said Wednesday that the Fed will cut rates when the economy is ready, despite the upcoming presidential election . He previously said he required more evidence that inflation is waning before making cuts.

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Meanwhile, Dimon’s JPMorgan and two other major US banks announced they exceeded second-quarter profit and revenue expectations after Wall Street activity bounced back.

JPMorgan adjusted earnings per share were $4.26, surpassing LSEG analysts’ expectations of $4.19.

Revenue spiked 20% to $50.99 billion, exceeding analysts’ expectations of $49.87 billion — likely aided by the bank raking in $2.3 billion in investment banking fees.

Despite the better-than-expected quarterly outcomes, Dimon said his firm — the largest US bank — was still cognizant of socioeconomic risks.

“The geopolitical situation remains complex and potentially the most dangerous since World War II — though its outcome and effect on the global economy remain unknown,” Dimon said.

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JPMorgan shares dipped 1.2% Friday, but shares are up nearly 20% so far this year.

Wells Fargo — the fourth largest US bank — also exceeded earnings and revenue expectations . Nevertheless, its shares fell just over 6% Friday. Wells Fargo shares are up 14% so far this year.

“We continued to see growth in our fee-based revenue offsetting an expected decline in net interest income,” CEO Charlie Scharf said in a statement.

Adjusted earnings per share were $1.33, above LSEG analysts’ expectations of $1.29.

Revenue was $20.69 billion, above analysts’ expectations of $20.29 billion.

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Citigroup — the third largest US bank — fell in line, exceeding profit and revenue expectations .

Adjusted earnings per share were $1.52, surpassing LSEG analysts’ expectations of $1.39.

Citigroup earned $20.14 billion in revenue, exceeding expectations of $20.07 billion and rising 4% since last year.

“Our results show the progress we are making in executing our strategy and the benefit of our diversified business model,” CEO Jane Fraser said.

Equities trading revenue jumped 37% to $1.5 billion and investment banking revenue soared 60% to $853 million.

The better-than-expected results come soon after US regulators fined Citigroup $136 million for failing to fix data issues identified in 2020.

Citi shares fell 1.8% Friday. Its stock is up 25% so far this year.

Rivals Goldman Sachs, Bank of America and Morgan Stanley are expected to report their second quarter results next week.

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