Dimon: Iran War Drives Inflation, Higher Rates

Dimon's warning followed U.S. President Donald Trump's threat to target Iran's power plants and bridges if the Strait of Hormuz remains closed. Dimon cited geopolitical risks including the Ukraine war, broader Middle East hostilities, and tension with China, stating nuclear proliferation remains the greatest danger from Iran.

War-driven inflation concerns have already led markets to rule out interest rate cuts this year, with the benchmark S&P 500 index closing its worst-performing quarter since 2022 due to the conflict and resulting energy price surges. Dimon noted the U.S. economy remains resilient, with consumers earning and spending, and businesses healthy, but cautioned about reliance on government deficit spending and past stimulus.

He identified President Trump's "Big, Beautiful Bill," deregulation, and AI-driven capital spending as economic positives. Dimon assessed the $1.8-trillion private credit market as relatively small, but warned that losses on all leveraged lending will be higher than expected when the credit cycle weakens due to declining credit standards.

He highlighted the lack of transparency and rigorous valuation in private credit, increasing investor sell-off risk, noting Blue Owl recently limited withdrawals from two funds after first-quarter redemption requests. Dimon also sharply criticized revised capital rules proposed by U.S. bank regulators, calling aspects "nonsensical" and "very flawed," stating JPMorgan's GSIB surcharge would only fall to 5.0%, which he deemed "absurd" and "un-American."