Jamie Dimon, the chief executive of JP Morgan, has warned that Donald Trump's repeated attacks on the Federal Reserve chair, Jerome Powell, could backfire and ultimately lead to higher interest rates and inflation. Speaking during an earnings call on Tuesday, Dimon said he had “enormous respect” for Powell, who recently became the target of a controversial US Department of Justice investigation linked to a $2.5bn renovation of the Fed's headquarters. Powell has denounced the probe as punishment for not aligning interest rates with the president's wishes.
“Everyone we know believes in Fed independence,” Dimon said. “And anything that chips away at that is probably not a great idea, and in my view, will have the reverse consequences. It’ll raise inflation expectations and probably increase rates over time.” His comments come as central banks around the world, including the Bank of England and the European Central Bank, issued a joint statement offering “full solidarity” to Powell.
Trump, who appointed Powell in 2018, has repeatedly criticised the Fed chair for failing to cut rates fast enough. On Tuesday, while returning to Washington from Detroit, Trump defended his attacks, calling Powell “a bad Fed person” and urging lower rates. He also dismissed Dimon's concerns, suggesting the JP Morgan boss might favour higher rates for personal gain.
Dimon made the remarks as JP Morgan reported a 7% drop in quarterly profits to $13bn, partly due to costs from a credit card partnership with Apple. The bank's chief financial officer, Jeremy Barnum, also warned that Trump's proposed 10% cap on credit card interest rates could severely restrict access to credit, particularly for the most vulnerable borrowers, and harm the broader economy. Barnum said the lack of details made it difficult to assess the cap's impact on JP Morgan's earnings.
