Inflation remains sticky at 3%, keeping Fed cautious
JPMorgan CEO Jamie Dimon warned that the U.S. Federal Reserve may not be able to deliver multiple rate cuts unless inflation meaningfully cools. Speaking to CNBC-TV18 on Monday, Dimon said the Fed faces a “hard time cutting” while inflation holds around 3%.
“If inflation does not go away, it’s going to be hard for the Fed to cut more,” Dimon said, noting that while he hopes for “decent growth,” the central bank could also be forced to ease only if a recession emerges.
The comments contrast sharply with market expectations of up to five cuts over the next 12 months, according to CME FedWatch data. The Fed already trimmed rates by 25 basis points last week, its first cut of 2025, which briefly pushed Bitcoin (BTC) above $117,500, its highest level in over a month.
Market bets vs. Fed caution
While traders anticipate at least two more cuts this year — in October and December — Dimon cautioned that sticky inflation could derail those forecasts.
The latest U.S. Consumer Price Index data showed inflation rising 0.4% in August, translating into a 2.9% annual increase, still above the Fed’s 2% target. Dimon emphasized that some factors could even push inflation higher before it trends down.
Historically, lower rates boost risk assets like cryptocurrencies by making credit cheaper, but a slower pace of cuts could dampen bullish momentum.
Dimon downplays stablecoin risks
Turning to digital assets, Dimon addressed the growing debate around stablecoins, which became a policy focus after Congress passed new regulations in July.
Dimon said he is “not particularly worried” about stablecoins, though he stressed banks should monitor the sector closely.
“There’ll be people who want to own dollars through a stablecoin outside the U.S., from bad guys to good guys to certain countries where you’re probably better off having dollars and not putting it into the banking system,” he explained.
JPMorgan already has exposure to blockchain payments through its JPM Coin, and Dimon revealed banks are even weighing whether to form a consortium to issue a stablecoin collectively. However, he questioned the need for central banks themselves to rely on such tools.
While some industry groups have urged lawmakers to tighten stablecoin rules — warning issuers may exploit loopholes to offer interest-bearing products — Dimon struck a more pragmatic tone. He suggested stablecoins will “develop over time” and coexist with traditional banking, rather than displace it.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.