JPMorgan accumulates cash and said inflation is not transitory.
June 15, 2021 | AtoZ Markets– JPMorgan Chase CEO, Jamie Dimon, has reaffirmed that the largest bank in the United States is accumulating large amounts of cash in the face of an increase in inflation that will not be transitory, and that will lead to an increase in interest rates.
“If you look at our balance sheet, we have $ 500,000 in cash. In fact, we have been accumulating more and more cash waiting for opportunities to invest at higher rates,” Dimon said during a virtual conference call.
According to the head of JPMorgan, the bank hopes that inflation in the US will not be a temporary phenomenon, but will lead to higher interest rates, and for this reason the bank is “prepared for that.”
“We have a lot of cash and capacity and we are going to be very patient, because I think there is a good chance that inflation is more than transitory,” Dimon said.
What Are the Current Inflation Figures
Currently in the US, the consumer price index (CPI) rose 0.6% last May, placing year-on-year inflation at 5%, corresponding to the highest figure since August 2008.
Meanwhile, if the most volatile food and fuel prices are excluded, core inflation last month was 0.7%, and 3.8% in the last 12 months, corresponding to the largest rise since 1992.
What Does the Fed Thinks
The Federal Reserve (Fed) has been very cautious in its comments on inflationary pressures in the country due to the extraordinary fiscal stimulus deployed.
He has also reaffirmed that the increase in demand as the restrictions of the pandemic are lifted in the country is an important factor that stimulates the rise in prices.
Read here our article about Keep an Eye on the US Federal Reserve This Week
However, its president, Jerome Powell, has recognized on several occasions that there will be notable price increases but they will be of a “temporary” nature, for which he has insisted that he does not plan to modify the central bank’s interest rates in the very future. near.
Let us remember that currently interest rates are between 0% and 0.25%, and it is expected that these will remain stable for the remainder of the year.
Last March, the last time they released quarterly U.S. economic forecasts, most officials expected to keep the Fed’s benchmark interest rate near zero until 2023, and officials believed that consumer prices would rise 2.4% in the fourth quarter of 2021 from a year earlier.
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