JPMorgan CEO warns Iran war could lift inflation, interest rates higher

JPMorgan Chase CEO Jamie Dimon warned Monday that the war in Iran could trigger prolonged oil and commodity price shocks, making inflation more persistent and potentially pushing interest rates higher than markets currently expect.

In his annual letter to shareholders, Dimon said the global economy is facing a series of major geopolitical challenges, including the war in Ukraine, the current conflict in Iran, broader tensions in the Middle East, terrorism, and rising strains with China.

Despite what he described as a troubling global backdrop, Dimon said the US economy has remained resilient, noting that consumers are still earning and spending, while businesses are generally in solid shape. He added, however, that the economy has also been supported by large government deficit spending and past stimulus measures.

“Now, because of the war in Iran, we additionally face the potential for significant ongoing oil and commodity price shocks, along with the reshaping of global supply chains, which may lead to stickier inflation and ultimately higher interest rates than markets currently expect,” Dimon wrote.

He also said continuing trade negotiations are adding to geopolitical uncertainty and warned that elevated asset prices, while supportive in the near term, could create additional risks if conditions deteriorate.

Dimon argued that the US must preserve its status as the world’s leading military power and maintain its economic strength, which he said also requires reviving the “American Dream.”

In the letter, he also addressed artificial intelligence, saying its full trajectory remains unclear but that investment in the technology does not appear to be a speculative bubble and is likely to deliver meaningful benefits.