JPMorgan President Warns that Recession May be Necessary to Quash Inflation

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Daniel Pinto would rather endure a recession than out-of-control inflation.

Inflation is still on the rise in the United States despite the efforts of the Federal Reserve. Interest rates are continuously hiked, but the market has still yet to bottom out. Some investors have expressed frustration with these seemingly-endless hikes, asking the Fed to dial them back. However, in the opinion of JPMorgan Chase President Daniel Pinto, a period of rate hikes and recession is preferable to out-of-control inflation.

“That’s why when people say, `the Fed is too hawkish,′ I disagree,” Pinto told CNBC.

“I think putting inflation back in a box is very important,” he said. “If it causes a slightly deeper recession for a period of time, that is the price we have to pay.”

Pinto’s reasoning for this stance is his own childhood in Argentina, during which inflation was so high and consistent, individuals could be priced out of their grocery purchases in the time it took for them to pick items off the shelf.

“Supermarkets had these armies of people using machines to relabel products, sometimes 10 to 15 times a day,” Pinto said. “At the end of the day, they had to remove all the labels and start over again the next day.”

As for what a prospective recession could actually look like, Pinto admitted that he’s not entirely sure. Many parts of the economy are actually doing quite well, so it’s been difficult to assemble a complete picture of what the bottom of the market could look like if and when we hit it.

″I don’t think we’ve seen the bottom of the market yet,” Pinto said. “When you think about corporate earnings heading into next year, expectations may still be too elevated; multiples in some equity markets including the S&P are probably a bit high.″

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3 months ago