The chief of America's largest bank says an economic "hurricane" is brewing and the Federal Reserve will face a huge challenge as it tries to rein in inflation without causing a recession. "Right now it's kind of sunny, things are doing fine. Everyone thinks the Fed can handle this," JPMorgan Chase CEO Jamie Dimon said at a conference Wednesday. But "that hurricane is right out there down the road coming our way," Dimon said, per Bloomberg. "We don’t know if it’s a minor one or Superstorm Sandy. You better brace yourself."
"JPMorgan is bracing ourselves, and we're going to be very conservative in our balance sheet," Dimon said. He said the Fed needs to meet soaring inflation with more interest rate hikes and "quantitative tightening"—a reduction in liquidity that was stepped up Wednesday as the central bank began reducing its balance sheet. Other central banks are preparing similar moves in what Reuters describes as a "first-ever round of global quantitative tightening," which is expected to "add stress to an already-slowing world economy."
Just weeks ago, Dimon said a "storm" was brewing, not a hurricane, and he predicted it would clear up relatively quickly, Business Insider notes. Wells Fargo CEO Charlie Scharf spoke at the same banking conference Wednesday and he warned that with inflation hitting consumer spending, the "soft landing" the Fed is aiming for is "extremely difficult to achieve in the environment that we're in today," per Reuters. (Read more US economy stories.)