Jamie Dimon, CEO of investment bank JPMorgan Chase, says the US Federal Reserve’s (Fed) war on inflation will eventually shake markets and that some will “swim on empty” if the benchmark interest rate is raised further, Markets Insider reports. .

“Personally, I think it’s going to shake up the markets at some point,” the banker told Yahoo Finance on Wednesday, referring to repeated hikes in the benchmark interest rate run by the Federal Reserve, the Washington-based central bank, before inflation in the U.S. .

Since last year, the Fed has raised its benchmark interest rate from nearly 0 to over 5% as the US, like the rest of the world, faces historic levels of inflation following massive cash infusions into the economy during COVID-19. pandemic, the rise in prices was then intensified by the start of the war in Ukraine.

Dimon says that amid a decade of “cheap money” and increasing deficits by successive administrations in Washington, U.S. inflation is proving more resilient than the Fed expected, and the banker is concerned about the prospect of further interest rate hikes.

“I just think there’s a lot of deficit financing, and that could drive long-term interest rates higher and stay that way,” he said, warning that such a situation could spell trouble for unprepared companies.

The head of an investment bank cites Warren Buffett’s favorite example

“Warren Buffett says that when the tide comes in, you’re going to see enough people swimming naked,” he said. “They had benchmark interest rates that they didn’t understand [și] they couldn’t withstand the double whammy of stagflation or a real estate crash or anything like that,” explained the CEO of JPMorgan Chase.

But a preliminary estimate released last week by the Commerce Department in Washington showed the U.S. economy expanded 4.9 percent in the third quarter of this year, more than double the 2.1 percent growth recorded in the second quarter.

The increase was the largest in two years, with the resilience of the US economy surprising economists and economists who had expected the US to slide into recession this year. Even JPMorgan Chase warned in a report published in January that the US economy was at risk of entering a “boiled frog” recession at the same time as the global recession.

But Dimon now says the current geopolitical issues facing the world are raising new concerns for investors.

“It’s Ukraine, Israel, war, death, the free nations of Europe,” he listed, noting that all this tension affects world trade and other aspects of the economy.