Morgan Stanley CEO slams the Federal Reserve and other economic forecasts for being wildly inaccurate, stating that excessive fiscal spending will offset the benefits of interest rate hikes.

JPMorgan Chase CEO Jamie Dimon said on Tuesday that the economic forecasts made by major central banks last year were "100% wrong," warning that sticking to a single economic expectation would pose risks and that one should be prepared for various scenarios. He also stated that the current situation of excessive spending and waste resembles that of the 1970s, which will offset the effects of interest rate hikes. In addition, Ray Dalio, the founder of Bridgewater Associates, also expressed pessimism about the economy next year.

Dimon has recently issued frequent warnings. At the Future Investment Initiative summit held in Riyadh, he stated that various factors have made predicting the economy increasingly difficult, and that one should be prepared for various possibilities and probabilities, rather than just proposing a single expectation.

"I want to point out that the economic forecasts made by major central banks 18 months ago were 100% wrong. To predict the situation for the next year, I would be very cautious."

Dimon was referring to the economic forecasts announced by the Federal Reserve at the beginning of 2022, when Fed officials insisted that the surge in inflation was "transitory." In addition to the incorrect price expectations, Fed officials collectively expected that interest rates would only increase to 2.8% by the end of 2023, but the benchmark interest rate has now reached 5.25%. At that time, the Fed expected the core inflation rate at the end of 2023 to be only 2.8%, which is 1.1% lower than the current actual figure.

Dimon doubts whether governments and central banks around the world can handle the surge in inflation and the slowdown in growth. He said, "Fiscal spending is now higher than in any peacetime period, and central banks and governments seem to feel omnipotent in managing everything, but I will be very cautious about the situation next year."

"Even if interest rates rise by 100 basis points, I will be prepared. I don't know if this will happen, but I think the current situation is more like the 1970s, with excessive spending and waste."

Currently, many Wall Street financial institutions are concerned about whether the Federal Reserve will raise interest rates by 25 basis points at the end of this year. However, Dimon believes that the effects of interest rate hikes will be offset by excessive fiscal spending and waste, and "I don't think there is much difference between raising interest rates by 25 basis points or not raising them at all."

Dimon previously warned that the federal benchmark interest rate could rise to 7%. When major banks announced their earnings reports earlier this month, Dimon also issued a warning, saying, "This may be the most dangerous moment in decades."

Bridgewater Associates founder Ray Dalio also expressed pessimism about the global economic outlook for 2024 at the same event, citing risks such as excessive public debt, geopolitical conflicts, and disorder.

Dimon also criticized the "whack-a-mole" approach taken by governments around the world in addressing the issue of climate change, stating that there is a lack of coordinated strategies. He said, "We will achieve the breakthroughs we need, but it will take longer than expected because we are basically inadequate."