JPMorgan Chase & Co. (NYSE:JPM) CEO Dimon Rules Out Negative Rates

JPMorgan Chase & Co. (NYSE:JPM) CEO Dimon Rules Out Negative Rates

JPMorgan Chase & Co. (NYSE:JPM) Chairman and CEO, Jamie Dimon, ruled out the possibility of negative interest rates happening in the United States. The comments assume significance in the wake of negative interest rates in Japan and some parts of Europe. The Federal Reserve is meeting in mid-March to discuss another interest rate hike amidst the talk of a global economic slowdown.

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Reasons For Optimism

JPMorgan’s Dimon said that there were concerns about the growth rate in the US economy. However, there were also reasons to be optimistic. He cited auto sales in the first two months of the year and increased wages, increased consumer spending and availability of cheap credit. Auto sales witnessed the highest monthly gain in 15 years in February.

Dimon’s comments were more or less the same as Fed Chair Janet Yellen when she answered queries raised by Congress after Japan resorted to negative rates. She told congress that the Fed needed to research thoroughly whether negative interest rates would even be legal. She said that the matter needed investigation before a decision was taken. Yellen also said that the FOMC would not likely see such a situation in the immediate term as the labor market was continuing to perform well.

Rate Cut Unlikely

In support of his argument, Dimon indicated several other positive signs for the American economy. He said that more people were working and that wages have started to increase. Backing up Dimon, was Bank of America Corp. (NYSE:BAC) which disclosed that there was no sign of economic slowdown, pointing out that consumers are spending more than expected.

The talk of negative interest rates has increased in the current year mainly for two reasons. One was the global economic slowdown aside from the US, and the other was that the stock market has been performing poorly. As the Fed is meeting again this month, interest rate talks are resurfacing. Taking into consideration earlier Fed comments, the Fed is not likely to cut interest rates any further.