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JPMorgan Chase's Dimon: Inflation 'might go higher than people think'

The nation’s largest bank said Wednesday that it’s starting to get worried about inflation, warning that the hot pace of price increases could last through 2022.

In an earnings call Wednesday morning, JPMorgan Chase (JPM) CEO Jamie Dimon told analysts and investors that year-over-year inflationary readings under 4% are “unlikely” over the next six months.

“We prepare for probabilities and eventualities,” Dimon said. “And one of those probabilities is that [inflation] might go higher than people think.”

Dimon added that high inflationary pressures could push policymakers at the central bank to tighten its easy money policies, although he said he doubts the Federal Reserve will raise interest rates “before late 2022.”

JPMorgan Chase’s commentary on inflation comes as the Bureau of Labor Statistics reported that prices rose by 5.4% on a year-over-year basis in September, the fastest pace of growth since 2008.

Fed officials, who have said they could raise rates if inflation expectations rise too much, have insisted that inflation should come down in the middle of next year as supply chain bottlenecks abate.

Dimon appears to agree, saying Wednesday that “I doubt we'll be talking about supply chain stuff in a year.”

Knockout earnings

For the bank, Dimon said inflation is not a major risk factor.

JPMorgan Chase reported earnings well above Wall Street’s estimates for the third quarter, raking in $30.4 billion in net revenues for the quarter ended Sept. 30 with earnings per share of $3.74 (above the consensus estimate of $2.97).

“If you have inflation of 4% or 5%, we're still going to open deposit accounts and checking accounts and grow our business,” Dimon said.

JPMorgan Chase got a boost from releasing $2.1 billion in credit reserves it had set aside to absorb losses during the depths of the pandemic. Strong merger activity and companies going public juiced the company’s non-interest revenue lines, which were up 3% in the quarter.

Still, the big challenge for JPMorgan Chase — and the banking industry at large — remains growing the loan pipeline for consumer products. The appetite for JPMorgan Chase credit cards remains modest, with average loans in its consumer and community bank division falling by 2% in the quarter.

“We see some signs of life, and we believe that recovery is strongly underway,” JPMorgan Chase CFO Jeremy Barnum said on the earnings call. “And it seems, hopefully, like Delta is really fading, so that's going to help.”

Shares of JPMorgan Chase were down over 2% in the hours after reporting earnings Wednesday.

Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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