JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said it’s possible U.S. growth and inflation prove fast enough to prompt the Federal Reserve to raise interest rates more than many anticipate, and it would be wise to prepare for benchmark yields to climb to 4 percent.
“It might force the 10-year up” if the Fed boosts short-term rates more than expected, Dimon said in an interview with Bloomberg Television’s Stephen Engle in Beijing, referring to the yield on 10-year Treasury notes. “You can easily deal with 4 percent bonds and I think people should be prepared for that.”
As long as rates climbed because the U.S. economy was in good health, the move would amount to “normalization,” Dimon said. He also said that increased U.S. fiscal borrowing, along with cutbacks in bond purchases by central banks around the world, “may cause more volatility, higher rates in a way we don’t fully understand,” given that the exit from quantitative easing is uncharted territory.
“We’ve never had QE, we’ve never had reversal,” Dimon said.
This article was provided by Bloomberg News.