JPMorgan Chase chief executive Jamie Dimon says he has yet to come across a US president who wants higher interest rates, but President Donald Trump is very vocal about it and who he chooses to lead the Federal Reserve could affect the central bank’s policy.
“I think the more important question is who he chooses next as Fed chair. That may affect Fed policy more than anything else," Mr Dimon told The National at the bank’s regional headquarters in Riyadh.
“This President is very verbal and he has very strong opinions, but he's also said, 'yes, the Fed will maintain its independence'. The Secretary of Treasury [Scott Bessent] says it,” Mr Dimon said.
Whoever is chosen, “it will be independent”, Mr Dimon said when asked about the relentless pressure on the Fed Chair Jerome Powell to cut interest rates, from Mr Trump, who has resumed criticism of Mr Powell, saying, “we have a person who is not at all smart right now”.
Mr Trump has been trying to exert greater control over the Fed this year amid repeated calls to deliver large interest rate cuts, but the Fed has thus far defied that. Consistent pressure on Mr Powell, whose term as Fed chair ends in May 2026, have raised questions of political interference that could undermine the central bank’s independence.
But Mr Dimon said everyone knows an independent Fed is necessary. “It's like a necessary condition, to ensure a healthy environment.”
On Sunday, Mr Bessent confirmed that the shortlist to replace Mr Powell has been narrowed down to five candidates and he expects to conduct one more round of interviews before presenting the names to the president next month.
Fed Governor Michelle Bowman, Kevin Hassett, director of the National Economic Council, Rick Rieder, BlackRock's chief financial officer of global fixed income, Christopher Waller, a Trump appointee to the Fed board, and the former Fed governor Kevin Warsh are in the mix.
On Wednesday, a divided US Federal Reserve lowered interest rates by 25 basis points, it’s second-quarter percentage point cut in a row, but Mr Powell pushed back on market expectations for another rate cut later this year.
"A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it. Policy is not on a pre-set course," he said.
The Trump Age
Speaking on the eve of JP Morgan's 90th anniversary, Mr Dimon touched upon a wide range of subjects: from policy uncertainty and media's obsession with Mr Trump, to JP Morgan’s ambitions of growing business across the Middle East, improved regional growth outlook in the wake of Israel-Gaza ceasefire and the so-called AI bubble stoking fears of market sell off.
Mr Dimon, who completes two decades at the helm of the biggest US lender by assets in January next year said the current US presidency is not different from others before that when asked whether the Trump Age is a threat or an opportunity.
“I always remind people, I have to deal with the world I have got, not the world I want, and I think it's true for almost every president that there are risks,” he said.
“I love the pro-business stuff and I’m all for smarter regulation good policy … education, companies, markets, [the transparency exposure] - drives growth, and bad policy causes failure. And I can't overemphasise all that.”
Like every prior administration, the current administration has its own priorities but “we'll get through it”, he said. “We're big boys. We're used to it.”
However, the media, he said is “obsessed with President Trump as if we have never seen anything like him happen before and they're just not being clear eyed”.
“And you know, I have to deal with all my friends in New York, and they get very upset with me about the decisions I have to make sometimes.”
‘Cockroach’ comment blown out of proportion
Mr Dimon said his comment this month about “cockroach”, following the collapse of US firms First Brands Group and Tricolor Holdings, which led to questions about the health of the private credit market, was “blown out of proportion”.
The failure of the two firms prompted Mr Dimon to warn that “when you see one cockroach, there are probably more”, which triggered a spate of comments from top US financiers on potential erosion in lending standards.
“My cockroach statement had nothing to do with private credit. It was blown out of proportion,” he said. “It was my fault. It's a word I shouldn't use. It was just too sexy for the press.”
There are growing concerns that any cracks in the sector and the broader leveraged credit markets could spread to financial institutions and the economy, though opinions remain divided.
“There have been credit issues in the wider market and a couple of those were frauds,” Mr Dimon said. “I would never blame that on private credit.”
Private credit has grown exponentially since the great financial crisis into a $1.7 trillion industry and the IMF managing director Kristalina Georgieva this month said she is worried about the risks building up in non-bank lending markets.
At the IMF and World Bank annual meetings in Washington this month, she said the fund was concerned as “what we have seen is a very significant shift of financing from the banking sector to non-bank financial institutions to a point that more than half of financing is now there”.
She said the non-bank financial institutions do not enjoy the same level of regulatory oversight as the banks do and “we are asking a question, what should be done to have more oversight, a better view of what is happening there”.
Mr Dimon said, “I would never let the IMF tell us what to do.
“The notion that they completely understand all the complexities of the credit market is absurd. I think what they said is they want to study it. That's completely reasonable," he said.
“What their [financial stability] report pointed out is that there are a number of non-bank financial institutions, which includes a very wide variety of stuff. Yes, what you have today is a huge growth in some of them, and a lot of it is arbitrage-related, which, to me, is a danger sign.
It is a reasonable question to ask, however, “I don't think they should be setting lending standards".
AI bubble and sell-off fears
The artificial intelligence boom is completely unlike the dot-com bubble of the 1990s and Wall Street is not complacent in providing capital to the companies leading the technology, Mr Dimon said.
“AI itself is real and happening and it's not five or 10 years down the road,” he said.
Even during the internet bubble, the emergence of that technology was also real but it was just “slower than people thought”.
“So, if you look at what came out of it, there were hugely successful companies. They just succeeded a little bit later than people thought and meanwhile, you had lots of bankruptcies too,” Mr Dimon said.
“I think in this case, it's real, it's moving fast and there's a lot of capital going into it,” he said, adding that some companies will "probably not make it. I'm not sure I'd call that a bubble.”
The rise of AI and subsequent ballooning of valuation of the companies leading the race has pushed the equities market to the multiple record highs this year.
US chip-maker Nvidia on Wednesday hit market capitalisation of $5 trillion, confirming its status as the hottest stock of the AI boom. Nvidia is well ahead of second-placed Microsoft, which has a market cap of more than $4 trillion, with Apple joining the elite club when it breached that mark on Tuesday.
Google parent Alphabet and e-commerce giant Amazon are in $2 trillion market cap bracket.
The rise of the so-called magnificent-seven tech companies has also led to fears of a market sell-off as valuations continue to soar. But “it doesn't worry me”, Mr Dimon said.
“Of course, it happens. Some event might trigger it, people can get scared, they rush to the doors and sentiment can change pretty quickly … it will change at one point,” he added.
“It's like you asking me whether we will have a recession? Of course, we will, I just don't know when.”
Middle East ambitions
JP Morgan, which has been part of some of the biggest public floats, debt market and mergers and acquisitions deals in the Middle East over the past five years, expects to grow in “every single area including investment banking – M&A, equity and debt capital markets, asset management, payments as well its custody business.
In Saudi Arabia alone, the bank has grown from a single employee in 2005 to setting up a regional headquarter housing 140 personnel, with 40 per cent of them women, Mr Dimon said.
“We have [all] our licences, we have a good investment banking market share, and we expect to invest in more.”
JP Morgan has a total notional balance sheet exposure to the Saudi market of $11 billion, a client base of 350 and does research on 50 companies, he said. “My view is it'll just continue to grow like that as the region gets stronger, safer. That'll be true, by the way, in the UAE, it'll be true in Kuwait, the whole GCC, as each country has its own growth plan.”
Filippo Gori, JP Morgan's Europe, Middle East and Africa chief executive told The National in May that the bank's Middle East revenue has almost doubled in the past five years, and it expects to grow it by another 50 per cent by the end of the decade.
With about 10 per cent yearly growth from 2020 until the end of last year, the Middle East is the fastest growing market within JP Morgan’s broader Emea business, he said at the time.
The lender remains focused on growing every territory it operates in. “The only country we haven't grown in in the last 15 years is probably Russia, meaning every country I go to, and no matter what, we've over time added people, capabilities, clients,” Mr Dimon said.
“We bank the countries, we bank the sovereign wealth funds and each one has its own growth patterns, its own legal, its own technology, its own strengths and weaknesses.”
The bank's regional growth in recent years has beaten the region’s GDP expansion rate, as economic overhaul drives across the Gulf opened new avenues of business, boosting advisory and deal mandates.
However, Mr Dimon does not see deal activity falling “off the cliff” once the kingdom’s overarching Vision 2030 programme ends at the turn of the decade. “No, absolutely not,” he said.
“You have 350 companies on the local stock exchange, and you're adding 50 a year, when most countries are not growing their stock exchanges very much, so that's a sign of innovation and growth.”
No blue-sky scenarios
JP Morgan, Mr Dimon said, is invested in the economic potential of Saudi Arabia and “we never rely on blue-sky stuff”.
“We build relationships permanently. It's not like buying or selling stocks. We have to add people, services, products,” he said. “I call the economy a little bit like the weather and regardless of the weather, we are going to improve what we can do for people and for companies and individuals here and outside of Saudi Arabia.”
The relative peace in Lebanon and Syria as well as the Israel-Gaza war ceasefire has also changed the growth outlook of the region, Mr Dimon said.
“Peace is the best opportunity for growth because peace will enhance your foreign direct investment and the willingness of people to take risks here. And that's for the region, that's not just for Saudi Arabia,” he said. “It is an absolute, complete, critical sea change in outlook and I think that is the most important thing.”
