This includes stagflation, plus Fed chairman Powell’s carefully orchestrated soft landing not coming to permanent fruition.
As such, Dimon says the Federal Open Market Committee’s (FOMC) caution is justified—even if it has earned the chairman the nickname’ Too Late Powell’ from Trump.
In recent days, the Fed’s attention might have been turned to activity in the bond market, with yields creeping higher, spurred by concerns about the fiscal health of the American economy.
In the past, the U.S. bond market has been a port in the storm, with foreign nations buying government debt with confidence that they would not only be paid back but with a portion of interest.
Even the phrase ‘QE’ can prompt an uneasy reaction from economists—after all, it would essentially dilute the value of the dollar, the world’s principal reserve currency and a pillar of economic stability for the U.S. economy.
“These bonds are sold every day,” Dimon said. “That’s done by investors around the world. [The Fed] cannot control all that. Foreigners own $35 trillion of U.S. financial tradable assets. And so … [the Fed] have to react to reality … and that’s not a criticism. They say they’re data dependent, but they have to wait and see exactly what happens and then do the appropriate thing.”
The tone of caution that Powell has set in 2025 has drawn the ire of the Oval Office—perhaps unsurprising given the fact that President Trump was pressuring the FOMC even on the campaign trail.
The pressure continued to mount with Trump even saying he might fire Powell if he didn’t announce a cut to interest rates, before quickly retracting the comment when markets reacted with concern that the independence of the Fed was being jeopardized.
“That does not tell you what the future is going to be. To worry about the future, look at all the things that affect the future [and] kind of work your way back to the current day. I’ve already mentioned huge deficits, we haven’t finished quantitative tightening yet, there are huge geopolitical issues, there are these inflationary factors out there and they have to react to all of that.
“So I think they’re doing the right thing to kind of wait and see before they decide.”
