JPMorgan Chase CEO jamie dimon warned that the conflict in Iran could shock oil and commodity prices, keeping inflation high and interest rates above current market expectations.
Released a day after the US President addressed his annual letter to shareholders donald trump With Iranian power plants and bridges threatened if the Strait of Hormuz is not reopened, Dimon highlighted the growing impact of geopolitical tensions on the global economy.
The 70-year-old bank chief, who has led JPMorgan, the largest US bank, for two decades, cited risks including the war in Ukraine, ongoing hostilities in the Middle East and tensions with China as factors posing “significant” threats to economic stability.
“Now, due to the war in Iran, we face reshaping of global supply chains as well as the potential for significant shocks to oil and commodity prices, which could lead to sticky inflation and ultimately higher interest rates than the market currently expects,” Dimon explained.
The market is largely ruling out interest rate cuts this year due to concerns over war-induced inflation. In Britain, Bank of England It kept its base rate at 3.75% after its latest monetary policy committee meeting, keeping borrowing costs down amid an uncertain economic outlook.
Policymakers in March cited recent geopolitical tensions, including the situation in Iran, as a factor in market volatility and rising oil prices. The Committee unanimously opted for a “wait and see” approach to assess the duration and impact of the conflict.
Earlier expectations of a possible rate cut have changed after inflation fell 3% in January. Economists now feel that if pressure on the economy continues then further increase in rates is possible.
Mortgage costs are already rising in the UK. Average fixed rates have increased over the past month, while the number of mortgage products available has declined sharply, reflecting market expectations of further interest rate hikes amid ongoing geopolitical uncertainty.