Dimon: "Difficult to Predict Whether US Economy Will Achieve Soft Landing... Just Wish Fed Good Luck"

Bank CEOs: "May Withdraw Investments from China Following US Government Guidelines if China Invades Taiwan"

Jamie Dimon, Chairman and CEO of JPMorgan Chase
Photo by Reuters Yonhap News

[Asia Economy Reporter Park Byung-hee] Jamie Dimon, chairman of JP Morgan Chase, the largest bank in the United States, testified before the U.S. House of Representatives hearing on the 21st (local time), stating that it is difficult to predict whether the Federal Reserve (Fed) can achieve a soft landing for the U.S. economy. Dimon appeared at the House Financial Services Committee hearing along with Jane Fraser, CEO of Citigroup, and Brian Moynihan, CEO of Bank of America (BOA), and made these remarks.

According to the Wall Street Journal (WSJ), when asked whether the Fed has the capability to avoid a hard landing for the U.S. economy, Dimon replied, "We are continuing to wish for luck."

Dimon pointed out that conflicting forces are affecting the economy, with both positive and negative aspects appearing simultaneously. He said that consumer activity is strong and jobs are plentiful, but inflation is high, supply chains are disrupted, war is ongoing in Ukraine, and consumer confidence is declining. He added that it is difficult to accurately predict whether the Fed can successfully guide a soft landing, citing uncertainties caused by the Ukraine war and the energy and food crises, and warned that the situation could worsen.

All the bank CEOs expressed deep concerns about inflation. CEO Fraser said that high inflation will slow global growth and that the high prices faced by consumers not only in the U.S. but worldwide are very worrisome.

On the same day, the Fed decided at the Federal Open Market Committee (FOMC) to raise the benchmark interest rate by an additional 0.75 percentage points. This marks the third consecutive giant step increase, with Fed Chair Jerome Powell emphasizing that large additional rate hikes are possible and that there will be no rate cuts until inflation stabilizes.

The bank CEOs also stated that if China attacks Taiwan and the U.S. government demands withdrawal from the Chinese market, they will comply with the government’s request. They responded this way when asked by Republican Representative Blaine Luetkemeyer of Missouri whether they are prepared to withdraw investments from China in the event of a Chinese invasion of Taiwan.

CEO Moynihan said, "We will follow government guidance," adding, "We have been doing business in China for decades, and if China’s stance changes, we will change ours just as we did in Russia." Chairman Dimon also expressed his position that they will fully comply with any directives from the U.S. government.

However, considering that China is a much larger market than Russia and that banks have significantly increased their investments in China over time, some analysts believe it will not be easy to withdraw investments quickly.

The bank CEOs are scheduled to testify before the Senate on the 22nd as well.

This content was produced with the assistance of AI translation services.