Jamie Dimon, the chief executive of JP Morgan, has warned that Donald Trump’s attacks on Federal Reserve chair Jerome Powell risk undermining central bank independence and could ultimately push up interest rates and inflation. Speaking on Tuesday, Dimon expressed “enormous respect” for Powell, who recently became the target of a US Department of Justice investigation over a $2.5bn renovation of the Fed’s headquarters. Powell has denounced the probe as retaliation for not setting rates in line with the president’s wishes.
“Everyone we know believes in Fed independence,” Dimon said during an earnings call. “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.” Ten central bank governors, including the Bank of England’s Andrew Bailey and the European Central Bank’s Christine Lagarde, issued a joint statement offering “full solidarity” to Powell.
Trump, who appointed Powell in 2018, has repeatedly criticised him for not cutting rates fast enough. On Tuesday, the president called Powell “a bad Fed person” and reiterated his demand for lower interest rates. He also lashed out at Dimon, suggesting the JP Morgan boss might favour higher rates for personal gain.
Dimon’s comments came as JP Morgan reported a 7% drop in fourth-quarter profits to $13bn, partly due to a one-off cost from its takeover of a credit card partnership with Apple. The deal was announced days before Trump called for a 10% cap on credit card interest rates, which has hit shares in major credit card providers. JP Morgan’s chief financial officer, Jeremy Barnum, warned that such a cap could lead to a severe reduction in credit access, particularly for those who need it most, and could harm the broader economy.
Barnum said the lack of details on how the cap would be implemented made it difficult to assess its impact on JP Morgan’s earnings. The bank is conducting contingency planning. Trump, speaking en route from Detroit to Washington, defended his actions and criticised both Powell and Dimon.
