Source: FX168
Today (September 22) is a big day for global markets, when the Fed will announce its interest rate decision at the end of its two-day meeting.
Most analysts believe the Fed will not elaborate on its tapering plan, but say the risk lies in the "bitmap" of interest rate forecasts by board members.
Jamie Dimon, chief executive of JPMorgan Chase & Co, has warned investors that the Fed may still be forced to take drastic policy measures next year, although it has done its best to allay concerns about inflation and interest rates.
Federal Reserve Chairman Jerome Powell has hinted that the Fed may begin to scale back its pandemic-era easy monetary stimulus by the end of the year.
He will outline more details at the end of the Fed's two-day policy meeting on Wednesday. The Fed will also release highly expected inflation and interest rate forecasts.
In an interview with the CNBC-TV18, Dimon said that if the US continues to see inflation continue to rise in the coming months, the central bank may be forced to act quickly.
"if inflation is so high that the Fed has to take more traditional crazy economic measures, such as hitting the brakes and withdrawing liquidity, then you will see a huge reaction. I didn't expect this to happen, but they may have to do it sometime next year, "Dimon said in an interview broadcast on Tuesday.
"the Fed can't always be proactive-I mean, sometimes they have to respond passively," he said.
The biggest uncertainty for the Fed is the direction of inflation. The latest data show that the US consumer price index rose 5.3 per cent in the year to August, down slightly from a 13-year high of 5.4 per cent in July.
Powell believes that the rise in inflation is temporary. But Mr Dimon said that if the high inflation figures continued into December, US policymakers might have to acknowledge that at least some of the price increases would continue.
"I doubt that when December comes, people will say that all this is temporary because it has been going on for quite some time now," he said in an interview with CNBC-TV18, but added that if the global economy maintained healthy growth while inflation was high, people's concerns would be contained.
"in my opinion, inflation is partly temporary and partly not-this is not a disaster," he added.
Edit / lydia