Dimon Shrugs Off Turmoil in U.S. Money Markets as No Big Deal

(Bloomberg) -- JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said the dislocation seen in U.S. money markets this week isn’t a significant problem -- and won’t be particularly troubling unless the economy weakens.

“I don’t think it’s a big deal we have dislocations. But it happened in very good times,” Dimon said Wednesday at a Business Roundtable press conference in Washington. “Those kinds of dislocations, in really bad times, will be far more dramatic than we think.”

The Federal Reserve on Wednesday injected $75 billion into U.S. money markets as policy makers’ benchmark rate broke outside their preferred range, after adding $53.2 billion Tuesday. The moves helped send the rate for general collateral repurchase agreements down to 2.175% from the record high of 10% reached Tuesday.

“Banks have a tremendous amount of liquidity, but also have a tremendous amount of restraints on how they use that liquidity,” Dimon said. “We think the Fed did exactly the right thing.”

At the wide-ranging press briefing, Dimon also addressed other issues facing the economy:

  • Negative interest rates for the U.S. -- advocated by some leaders, including President Donald Trump -- are a “really bad idea,” Dimon said. “I don’t think it’s worked around the world. It has adverse consequences that we don’t understand, not just in the short run -- 10 years after the fact.”
  • While “a recession will come,” Dimon said that “my own gut tells me it’s not imminent.”
  • Dimon said that while taxes on the wealthy have never been an effective tool in the past, he is OK with paying more himself.

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