Jamie Dimon Warns Fed Faces Tough Path on Rate Cuts Amid Sticky Inflation

JPMorgan Chase CEO Jamie Dimon cautioned that the U.S. Federal Reserve will find it difficult to keep lowering interest rates unless inflation falls more decisively. 

Speaking to CNBC-TV18 on Monday, the head of the nation’s largest bank said inflation remains “a little bit stuck at 3%,” complicating expectations for multiple cuts over the coming year.

Rate-Cut Hopes Tempered by Persistent Inflation

Dimon explained that while he hopes the Fed will eventually cut rates to support “decent growth,” policymakers should avoid reductions triggered by an economic downturn. “If inflation does not go away, it’s going to be hard for the Fed to cut more,” he said, adding that there are “arguments why it’s going to go up, not down.”

His remarks contrast with market optimism. Following the Fed’s first 2025 rate cut of 25 basis points last week—an action that helped push Bitcoin above $117,500 for the first time in more than a month—investors began pricing in as many as five additional cuts over the next year. Data from CME’s FedWatch tool shows traders expect another quarter-point reduction at the Fed’s late-October meeting and a similar move in December.

However, the latest U.S. inflation report shows consumer prices rising 0.4% in August, translating to a 2.9% annual increase, still above the central bank’s 2% target. Fed projections hint at possibly two more cuts before year-end, but Dimon’s caution suggests those expectations may be overly ambitious.

Stablecoins Not an Immediate Threat: Dimon

Dimon also addressed the growing conversation around stablecoins, digital tokens pegged to the U.S. dollar and recently placed under new Congressional regulation. Despite concerns from banking groups that stablecoins could siphon deposits away from traditional banks, Dimon struck a measured tone.

“I’m not particularly worried about it,” he said, noting that JPMorgan and other financial institutions are monitoring the sector closely. He acknowledged that some users—from “bad guys to good guys” to people in countries with unstable currencies—might prefer holding dollars through stablecoins rather than in local banks.

JPMorgan itself has experimented with blockchain-based payment solutions, and Dimon suggested that banks may eventually form a consortium to issue their own token. Still, he questioned whether central banks need to adopt stablecoins for interbank settlements, predicting that their role “will develop over time.”