Jamie Dimon backs Jerome Powell’s rate cut strategy

The Fed may claim it's not Jay Powell's job to please the markets , but backing from JPMorgan CEO Jamie Dimon doesn’t hurt.

In September, Powell and the Federal Open Market Committee (FOMC) cut the U.S. base rate by 50 basis points—twice the 25 bps most analysts had expected .

The move was met with a market rally, boosting stocks. While some analysts now wonder if the Fed acted too aggressively, Dimon has expressed strong support for the decision.

In a Bloomberg TV interview published yesterday, the Wall Street veteran was asked if he thought Powell's cut was a mistake: "No, actually," he responded.

"You gotta separate the here and now," Dimon said. "Inflation has definitely been coming down, they don't want to go into a recession. Unemployment has been going up."

While Dimon is openly skeptical about whether Powell and his peers will pull off their task—namely whether they can bring inflation back to the 2% target—he did continue to back the group's strategy more widely.

"They were late raising rates but they raised very high, rapidly, to 5% which I think is the right thing," Dimon added. "And they're right to take the foot off the gas on that one."

Focussing on the long-term

The billionaire banker, who took on the top job at JPMorgan nearly two decades ago, has also distanced himself from speculators who hung on Powell's every word for a hint of what cut would be to come.

Indeed, the 68-year-old has questioned whether the public really cares about the details around interest rates, telling CNBC in August: "Every day 325 million Americans go to work, go to their jobs, take care of their families, take care of their kids, build out their house, change a job. And it could be affected by the Fed changing rates by 50 base points? I don’t think so.”

In the interview released this week, Dimon again advocated for stepping away from the detail and focussing on the bigger picture.

"I don't think it matters that much—50, 25—honestly, but I think it was OK," he added. "If inflation comes back, I'm looking at future things—the remilitarization of the world's inflationary, the fiscal deficits of the world—particularly the United States—are inflationary, the green economy's inflationary, demographics are inflationary. It's very possible energy prices down the road—I'm talking two or three years—will be inflationary.

"Those will hit later. They [the Fed] should react at that time to those things, but I don't think we can anticipate that. We don't know that that's going to happen."