Jamie Dimon Cautions Interest Rates Might Go Much Higher

If interest rates have really stopped soaring, no one told “America’s Banker.”

During a Q&A with analysts at JPMorgan Chase’s Investor Day on Monday, the megabank’s chairman and CEO Jamie Dimon opined that Wall Street’s recent comfort with the idea that the Federal Reserve has entered a cooling-off period on rate hikes might be very misplaced.

“I think everyone should be prepared for rates going higher from here,” mused Dimon after pointing out that the credit environment remains very tight despite the Fed’s aggressive rate hikes, proving that central bankers might not have done enough to push excess liquidity out of the system. 

“I think there’s a chance you could have rates ticking up, and not to 3.78,” Dimon warned. “I’m talking about  4.25, 4.5, 5, 6. Hell, maybe even 7.”

Dimon’s prediction could be dire for smaller banks — ie every U.S. bank not named JPMorgan Chase — after many were caught wrong-footed on 10 consecutive rate hikes in just over a year, which led to unprecedented bank runs and the failures of Silicon Valley Bank, Signature Bank, and First Republic.

JPMorgan also announced Monday that it will see a $3 billion bounce on its net interest income in 2023 thanks to its emergency acquisition of First Republic, giving Dimon another big win in his 17-plus years at the helm.

And it appears that Dimon is not yet ready to surrender the wheel, unlike Morgan Stanley chief James Gorman, who announced on Friday that he will step aside before the end of the year. When asked how much longer the 67-year-old Dimon intended to stick around, he joked “Three and a half years” before admitting “I can't do this forever, I know that. My intensity is the same. I think when I don't have that intensity, I should leave.”

Dimon played coy as to who will replace him, however, refusing to directly answer a question that has beguiled Wall Street gossips for over a decade. When pressed on details for a succession plan that has changed numerous times over the years and remains a mystery to almost everyone, Dimon offered “We’re on the same plan we had before.”