USA: The Wall Street bank asserts that the banking crisis has increased the likelihood of an economic downturn.
The recent financial turmoil brought on by Silicon Valley Bank's (SVB) demise has increased the likelihood of a US recession, according to Jamie Dimon, CEO of JPMorgan Chase, who also noted that lenders are currently tightening credit.
In a Thursday interview with CNN, Dimon said, "We are seeing people reduce lending a little bit, cut back a little bit, and pull back a little bit." Although the turmoil in the industry "is recessionary," he claimed that a recession won't necessarily result from it.
Also Read: Over 40 cr loans sanctioned under MUDRA scheme in last 8 yrs: Govt
Following his statement this week that the crisis is still ongoing and will be felt for years, Dimon made these remarks this week. This unexpected development has "significantly changed the market's expectations, bond prices have recovered dramatically, the stock market is down, and the market's odds of a recession have increased," the banker wrote in his annual letter to shareholders on Tuesday.
Also Read: Positive RBI growth forecast will lead to rate decreases in October: Nomura
The recent crisis, in his words, has "provoked lots of jitters in the market and will clearly cause some tightening of financial conditions as banks and other lenders become more conservative."
SVB and Signature Bank failed within days of each other in early March as a result of extensive deposit runs. Top Wall Street banks, including JPMorgan, ultimately came to the aid of a third lender, First Republic, by depositing $30 billion into its account.
Fears among investors that First Republic might be the next US bank to fail prompted the big lenders to intervene.
Also Read: Forex reserves drop by USD329 million to USD578.45 Billion
The outbreak then spread to Europe, where Credit Suisse soon ran into problems before being quickly acquired by competitor UBS in a deal facilitated by the nation's central bank.