JPMorgan CEO Jamie Dimon warns that persistent inflation may limit Fed rate cuts, while downplaying stablecoins as a threat to banks.
JPMorgan CEO Jamie Dimon has cautioned that the Federal Reserve may find it difficult to cut rates again, while inflation remains above target.
He spoke at the JP Morgan India Investor Conference and said that inflation appears “stuck at 3%,” which is still higher than the Fed’s 2% goal.
The Fed lowered rates by 25 basis points in September, bringing them to a range of 4.00% to 4.25%.
Markets expect more cuts this year, but Dimon doubts that is realistic.
Dimon’s concerns are similar to warnings from several Fed leaders. For example, St. Louis Fed President Alberto Musalem said there is “limited room for easing further.”
Atlanta Fed President Raphael Bostic also suggested that September’s move might be the only cut this year.
At the same time, new Fed Governor Stephen Miran is urging more aggressive action. He has proposed cutting rates by 1.25 percentage points across the remaining meetings for the rest of the year. Miran believes that current rates are about 2 points too high due to tariffs, tax policy and immigration restrictions.
This split shows a great deal of uncertainty inside the central bank. Some leaders fear that inflation will stay above target for too long, while others are seeing risks of weaker growth if policy remains too tight.
Dimon also addressed the issues with stablecoins, which have become a hot topic in Washington and on Wall Street. He said that stablecoins pose no major threat to banks, even though industry groups are lobbying Congress for tighter restrictions.
“I’m not particularly worried about stablecoins,” Dimon said. He added that blockchain technology is real, but must be differentiated from speculative crypto trading.
Banking associations have warned lawmakers that yield-bearing stablecoins could pull trillions in deposits from banks.
Citigroup analysts compared the risk to the 1980s money market fund boom, when investors moved deposits into higher-yielding alternatives.
Yet Dimon’s position seems to be different from his peers. He believes that stablecoins will develop naturally as a legitimate payment tool, and that banks like JPMorgan can come into the picture by providing custody and Treasury services for reserves.
Congress passed new laws this year under the GENIUS Act, giving regulators authority over stablecoin issuers. Still, banks are arguing that loopholes allow issuers and affiliates to pay yields on stablecoins.
Treasury estimates show that $6.6 trillion in deposits could eventually move if stablecoins gain wider adoption. Coinbase and other platforms already offer yields of up to 5%, which is far above the 0.6% average U.S. savings account rate.
At the same time, stablecoin transactions are faster and cheaper than traditional payments. Studies show that they can process transfers up to 13 times cheaper, with near-instant settlement.
The market has grown, from $4 billion in 2020 to more than $285 billion today. Analysts predict that it could handle $1 trillion in annual payments by 2030.
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