JPMorgan Expects Higher Interest Rates & Strong Economy, Stockpiles Cash

JPMorgan CEO - Jamie Dimon, said on Monday that the bank is holding around $500 billion in cash in order to benefit from higher interest rates.

"We've actually been effectively stockpiling more and more cash, waiting for opportunities to invest at higher rates. So our balance sheet is positioned (to) benefit from rising rates”, Dimon commented. The CEO expects rising inflation to result in higher interest rates over the next 9 months.

"I think you're also going to have a very, very strong economy”, which will also benefit the retail bank, he said. All these factors are being taken into account when managing the company’s balance sheet.

The Federal Reserve is expected to make a statement on Wednesday that will indicate when the US central bank is likely to begin paring back its monetary stimulus. The Fed's preferred inflation gauge - the core personal consumption expenditures price index - rose to 3.1% in April, its highest annual rate since July 1992.

Dimon also forecast that the bank's bond and equity trading division will reach $6 billion in revenues this quarter, and its investment bank may report one of its best-ever quarters.

"I would just use a number like up 20% from both prior year and prior quarter. It could be 15% to 20%”, the CEO added. According to him, the bank is benefiting from several big deals that "may or may not close" this quarter, as well as strong client activity in equities and debt capital markets and mergers and acquisitions.

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