JPMorgan CEO Jamie Dimon said the US Federal Reserve may find it difficult to reduce interest rates unless inflation is high, and also said that stablecoins don’t currently pose a major risk to banks.
In an interview with CNBC-TV18 on Monday, he noted that inflation seems “a little stuck at 3%.” Dimon expressed hope for steady economic growth rather than rate cuts driven by a potential recession. He said, “If inflation does not go away, it’s going to be hard for the Fed to cut more.”
Market expectations of Fed cuts
Dimon’s remarks contrast with market expectations, as some investors expect up to five rate cuts over the next year.
CME FedWatch data shows the market anticipates further modest cuts: 25 basis points in late October and another in early December. The Fed’s own projections indicate the possibility of two more cuts before the end of the year, with further cuts possible in 2026.
Meanwhile, US inflation data for August showed a 0.4% increase, bringing the year-over-year rate to 2.9%, above the Fed’s 2% target.
Impact on crypto markets
The lower interest rate is expected to boost the crypto markets. The first rate reduction of 2025 came as the Fed cut rates by 25 basis points, bringing the federal funds target range to 4.00%-4.25%. This move pushed Bitcoin above $117,500, a level not seen in over a month.
Both the crypto and finance communities are closely watching the U.S. Federal Reserve’s upcoming rate cut decision. BitMine Chairman Tom Lee said that if the Fed lowers rates, Bitcoin, Ethereum, the Nasdaq 100, and smaller companies could benefit the most.
Clear stablecoin guidelines needed
On the topic of stablecoins, Dimon said he isn’t overly concerned about their impact on traditional banks. Still, he emphasized that financial institutions need to remain vigilant and understand the evolving space.
In the same interview, he said a stablecoin “if it’s like a mutual fund, probably needs rules like a mutual fund,” meaning it would need clear guidelines and protections for investors. Unlike a traditional mutual fund, however, a JPMorgan-issued coin could pay interest, highlighting the different structure and oversight needed.
Dimon also pointed out that certain individuals or countries may prefer holding dollars through stablecoins rather than using banks. Banks, including JPMorgan, are looking into stablecoin projects and may join forces with other institutions to launch a shared token.
Also Read: Central Banks Could Hold Bitcoin Like Gold by 2030: Deutsche Bank
