The CEO of JPMorgan, Jamie Dimon, stated that the US Federal Reserve will face challenges in reducing the interest rate unless inflation decreases, and he does not view stablecoins as a significant threat to the banking industry.
“If inflation does not subside, it will be difficult for the Fed to implement further cuts,” Dimon, who leads the largest bank in the US, told CNBC-TV18 on Monday.
“Inflation appears somewhat stuck at 3%. I can provide several reasons for why it might increase rather than decrease,” he remarked, expressing optimism for “reasonable growth” and a rate reduction instead of the Fed needing to lower rates due to a recession.
The market anticipates several rate cuts
Dimon’s outlook has dampened the market’s anticipation of multiple rate cuts, with some predictions suggesting as many as five over the next year.
Typically, interest rate reductions have positively influenced crypto markets, as lower borrowing costs boost investor confidence in riskier assets. The Fed initiated a 25 basis point rate cut on Wednesday, marking their first decrease in 2025, which helped push Bitcoin (BTC) above $117,500 for the first time in over a month.
CME FedWatch data indicates that the market is looking for another 25 basis point drop when the Fed convenes in late October, followed by a similar cut in early December.
The Fed’s projections reveal a significant variance, but suggest two additional cuts may occur before year-end, with another possibly occurring in 2026.
Recent US inflation data, released on September 11, showed a 0.4% increase in August, resulting in a 2.9% rise over the past year, exceeding the Fed’s target inflation rate of 2%.
Dimon “not particularly concerned” about stablecoins
Dimon also commented on stablecoins, which have emerged as a significant regulatory focus for banks following Congress’s passage of new laws in July.
He noted he’s “not particularly concerned about” stablecoins, but emphasized that his bank and others need to “stay informed and understand them.”
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“Individuals may wish to possess dollars through a stablecoin outside the US, whether they’re good actors or bad, or from certain countries where it might be preferable to hold dollars rather than depositing them in the banking system,” he explained.
He reiterated that JPMorgan is engaged with stablecoins and that the banking sector is considering establishing a consortium to create a token.
“I’m uncertain if central banks even need to utilize it among each other, so it will evolve over time,” he added.
Banking organizations have urged Congress to reinforce regulations surrounding stablecoins, citing concerns that loopholes permit stablecoin issuers and their affiliates to offer interest or yields, which could undermine bank accounts and destabilize the financial system.
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