© Reuters. FILE PHOTO: JP Morgan CEO Jamie Dimon delivers a speech during the inauguration the new French headquarters of JP Morgan bank in Paris, France June 29, 2021. Michel Euler/Pool via REUTERS/File Photo

By Lananh Nguyen

MIAMI (Reuters) -JPMorgan Chase & Co. Chief Executive Jamie Dimon told Reuters on Wednesday that the U.S. economy remained in good shape, but warned “sticky” inflation could prompt the Federal Reserve to raise interest rates above 5%.

In a wide-ranging interview with Reuters, Dimon warned of the adverse impact of stricter regulation of credit card fees and said he planned to visit China since it was important to maintain relations there.

In reference to inflation, Dimon said “people should take a deep breath on this one before they declare victory because a month’s number looked good.”

“It’s perfectly reasonable for the Fed to go to 5% and wait a while,” Dimon said.

But if inflation comes down to 3.5% or 4% and stays there, “you may have to go higher than 5% and that could affect short rates, longer rates.”

His comments came after Federal Reserve officials said earlier on Wednesday more interest rate rises are on the cards as the U.S. central bank presses forward with efforts to cool inflation.

From a peak of nearly 7% in June, the Fed’s preferred measure of inflation stood at 5% in December – well above its 2% target but heading steadily downward.

Dimon said a default on U.S. debt – a prospect the country faces unless its debt ceiling is raised – would be potentially “catastrophic.”

“We cannot have a default,” Dimon said. It could cause permanent damage to America and “could destroy its future,” he said.

President Joe Biden, in his address to a joint session of Congress on Tuesday, urged Republicans to raise the $31.4 trillion debt ceiling, which must be lifted in the coming months to avoid a default.

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