JP Morgan chief warns of multiple US interest rate rises as cost of new mortgages set to surge

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The world’s most powerful banker has warned there could be as many as seven interest rate rises in the US this year, as households around the world grapple with a cost of living squeeze.

Jamie Dimon, the chief executive of JP Morgan and Wall Street’s longest-serving bank boss, told analysts on Friday there “is a pretty good chance there’ll be more than four [increases this year]. It could be six or seven”.

“I grew up in the world where Paul Volcker raised interest rates 200 basis points on a Saturday night. And this whole notion that somehow it’s going to be sweet and gentle and no one is ever going to be surprised. I think it’s a mistake.” 

The billionaire’s forecast coincided with JP Morgan unveiling record annual profits but also rising costs. They come as President Biden is faced with an inflation rate of 7pc after prices rose at the fastest pace for 40 years last month. 

As expectations rise that the Federal Reserve might raise rates as soon as March, households in Britain are facing similar pressures. 

Rates on new mortgages are expected to surge to their highest level since the Brexit referendum as the Bank of England lifts borrowing costs to stamp out inflation running at a 10-year high.

Market bets on interest rate rises suggest average mortgage rates will jump from 1.5pc to 2.4pc by the end of this year, adding close to £100 in repayments for a typical home loan, according to Capital Economics.

The monthly payment on a £200,000 mortgage with a 25-year term would rise from £800 to £887, adding to a cost of living crunch battering consumers.

Markets have raised their bets on a second Bank of England rate increase in three months after data showed stronger-than-expected growth in November. 

The Office for National Statistics revealed the economy returned to its pre-pandemic size for the first time after a 0.9pc jump in GDP, far faster than the 0.4pc growth expected by economists.

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