JPMorgan CEO has a sharp message on inflation

JP Morgan Chase (JBM) CEO Jamie Damon She stepped in front of the cameras on Monday with Wall Street Desperate for a counted vote. The United States and Israel struck Iran over the weekend, oil markets were shaken, and investors wanted to know how bad the attack was Economic inflation There could be repercussions. Damon’s answer was cautious but clear.

He speaks to Bloomberg TV’s Lisa Abramovich on JP Morgan conference In Miami Beach, Dimon said the conflict will push gas prices higher in the near term. But he drew a sharp line between short engagement and long engagement. “If it doesn’t last long, there won’t be a big inflationary hit. If it lasts a long time, it will be different,” he told Bloomberg.

This warning is very important at this time. President Trump has indicated that the military campaign in Iran may last weeks, not days. And the movement of oil tankers through Strait of Hormuz Business has virtually ground to a halt, as shipping companies and insurance companies pull ships from the world’s most important oil lanes.

What the oil market is doing now

The energy market reaction has been sharp, but not yet catastrophic. Brent crude rose about 9% on Monday to around $79 a barrel, while US West Texas Intermediate crude rose more than 7% to around $72. Both moved off their highs by the afternoon as markets weighed OPEC’s decision to increase production by 206,000. barrels per day In April.

At the pumping stations, Americans are already feeling it. National average per gallon of regular gasoline Hit $3 on Monday For the first time since December, up 8 cents from last week. GasBuddy’s Patrick De Haan warned that the average could reach $3.10 to $3.20 by the end of the week.

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The biggest concern is the Strait of Hormuz. About 20% of the world’s daily seaborne oil supplies pass through it. Four ships have already been bombed in Gulf waters since the conflict began. If tanker flows are not resumed quickly, Wood Mackenzie warns Oil may exceed $100 per barrel.

Inflation was indeed Dimon’s biggest concern

Even before the Iranian strikes, Dimon was sounding the alarm about inflation’s stubborn elasticity. On Monday he called it a day “Skunk at the party” For an economy that appears to be strong on the surface. The image is intentional: everything looks fine until the smell hits you.

His interest is not limited to oil only. He pointed to a broader mix of pressures that have kept prices well above the Fed’s 2% target. The latest data supports it.

The Consumer Price Index for January came out By 2.4% year-on-year, down from 2.7% in December, with fundamentals Consumer price index By 2.5%. Both readings were better than expected. But Dimon’s point is that the underlying pressures have not gone away.

What Dimon is saying is to keep inflation constant

• The fiscal deficit far exceeds historical norms, with government debt levels that Dimon described as unprecedented
• A labor market that, although slowing, still supports wage growth above productivity gains
• Resettlement and Suppliers Restructuring leading to increased structural costs across sectors
• Defense and infrastructure spending adds to the ongoing demand pressure on the economy
• The Iranian conflict adds a near-term energy price shock on top of all of the above

Where the Fed stands heading into its March meeting

the Federal ReserveMaintained rates constant At its January meeting, it kept the benchmark federal funds rate in a range of 3.5% to 3.75% after three consecutive cuts through the end of 2025. Markets were already skeptical about the March cut before the Iran conflict. These doubts have now been greatly strengthened.

Continuing medical educationFedWatch’s FedWatch tool showed the probability of a rate hold at the March 17-18 meeting at nearly 97% as of Monday, with the Iran conflict removing any remaining case for monetary policy easing in the near term. Dimon did not explicitly call for the Fed to stand its ground, but his framing of inflation as an unresolved risk left little room for a different outcome.

Why does Damon’s voice carry weight now?

Dimon acknowledged on Monday that the US consumer and corporate sectors are in good shape. Debt service ratios are stable, balance sheets are healthy, and the economy is still growing. But he was careful not to declare victory.

“Right now, the economy is doing well, and asset prices are high,” he said. Bloomberg TV. “I think there is a little too much abundance.” He also warned investors to expect potential cyberattacks and terrorist activities as a natural result of Iranian strikes, noting that banks could be targets.

The duration of the Iranian conflict is now the most important variable for inflation, energy markets, and Fed policy in the coming months. Damon’s message was not one of panic. It was hard realism: the economy can accommodate a short engagement, but a prolonged engagement completely changes the calculus.

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