- Markets are probably overreacting to the October inflation data, according to Jamie Dimon.
- Tuesday's softer-than-expected CPI number sparked a stock-market rally, with the S&P 500 jumping 2% in a single session.
The Federal Reserve shouldn't call time on its inflation fight just yet, according to Jamie Dimon.
The JPMorgan Chase CEO said Tuesday that investors were probably "overreacting" to Tuesday's Consumer Price Index report, which showed that prices rose at a softer-than-expected rate of 3.2% year-on-year in October.
Stocks soared after that number came in, with both the benchmark S&P 500 and tech-heavy Nasdaq Composite jumping 2% in the space of a single session, while 10-year US Treasury bond yields extended their retreat away from 16-year highs.
"Personally, I think people are overreacting to short-term numbers and they should stop doing that… I think inflation's probably a little stickier than that shows," Dimon told El Financiero Bloomberg TV, shortly after the data was published.
Since March 2022, the Fed has raised interest rates from near-zero to around 5.5% in a bid to clamp down on soaring prices, and that's helped inflation to cool toward its 2% target.
But Dimon – who in September predicted borrowing costs could spike to 7% – warned that the central bank shouldn't be ready to call time on its tightening campaign just yet.
"I think they're doing the right thing to pause for now, they've raised rates a lot, to wait to see the effect on the economy and the US, particularly as the excess fiscal spending is winding down and quantitative tightening is kicking in, but I still think you should be prepared that they might have to do a little bit more, just as a risk management tool," he told Bloomberg.
"I'm afraid inflation may not go away that quickly," Dimon added.
The JPMorgan boss isn't the only big name on Wall Street telling markets not to put too much stock in Tuesday's CPI print.
Billionaire Citadel founder Ken Griffin also flagged the risk that inflation stays sticky Tuesday, telling Bloomberg that the Fed will only retain its credibility if it puts across "the message that they will put the inflation genie back in the bottle".