CEO of JPMorgan Chase Jamie Dimon warned in its annual letter to shareholders that the war in Iran could lead to more stubborn inflation as well as higher interest rates than the market currently anticipates.
Dimon’s letter was released Monday in conjunction with JPMorgan’s 2025 annual report and indicates that the war in Iran could cause energy shocks as well as disruptions to global supply chains that could lead to disruptions in global supply chains. inflation remain higher than expected.
Inflation that persists above the Federal Reserve’s 2% and rises further from its already high level could also prompt the central bank to raise interest rates to slow the pace of price growth.
“Now, due to the war in Iran, we also face the risk of significant shocks to oil and commodity prices, as well as the reshaping of global supply chains, which could lead to higher inflation and, ultimately, higher interest rates than markets currently expect,” Dimon wrote.
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JPMorgan Chase CEO Jamie Dimon said the war in Iran could drive up inflation and interest rates. (Al Drago/Bloomberg via Getty Images)
Dimon said the main risks facing financial markets and the economy are geopolitical in nature, including the war in Iran and Russia’s war in Ukraineas both conflicts have an “impact on countries and economies around the world that are not directly involved in the war.”
“Nations that rely heavily on imported energy are already seeing the effects. And it’s not just energy, but also commodities that are byproducts of energy. oil and gassuch as fertilizers and helium. And given the complexity of our global supply chains, countries are experiencing disruptions in shipbuilding, food and agriculture, among others,” Dimon wrote.
“The outcome of current geopolitical events may very well be the determining factor in how the future global economic order plays out – but then again, this may not be the case,” he added.
Dimon said that while the most important outcome of these conflicts should be “the appropriate resolution of the current wars and, ultimately, peace on Earth, we must understand and follow the economic effects” of these conflicts and the risks they pose.
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The war in Iran has disrupted the flow of oil through the Strait of Hormuz, a key chokepoint for ships transiting the Persian Gulf. (Giuseppe Cacace/AFP via Getty Images)
He said a “bad confluence of events” can usually cause some degree of recession accompanied by high credit losses and market volatility, as well as falling asset prices and high unemployment, although this could manifest itself in different ways in different locations.
“There are some scenarios that would lead to a recession, which would generally reduce inflation, and other scenarios that would lead to a recession accompanied by inflation (stagflation – where inflationary forces outweigh deflationary forces),” Dimon said.
“The problem with the garden party – and this could happen in 2026 – would be that inflation is slowly increasing, instead of slowly decreasing,” he added. “This alone could cause interest rates will increase and asset prices are expected to fall. Interest rates are like the gravity of almost all asset prices. And a fall in asset prices at any given time can quickly shift sentiment and cause a flight to cash. »
IRAN WAR COULD PUSH INFLATION HIGHER THIS YEAR, SAYS GOLDMAN SACHS
Teleprinter Security Last Change Change % JPM JPMORGAN CHASE & CO. 294.60 -0.78 -0.26% Dimon said it was too early to say how Iran was will play out and what it means for the balance of power in the region, and said the Iranian regime has fomented terrorism around the world while violently repressing its own population.
“Time will tell whether the current war in Iran will achieve our short- and long-term goals in the region and at what cost. We should not turn a blind eye to the role that the current regime in Iran has played in encouraging terrorism and killing thousands of people, including Americans and many Iranian citizens, for many years,” he said.
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“This threat must be addressed appropriately (by those with more information and knowledge than I) – and urgently if Iran ever acquires a nuclear ballistic missile. Nuclear proliferation remains the most serious threat to the future of humanity,” Dimon wrote.