JPMorgan Chase CEO Jamie Dimon warned in his annual letter to shareholders that the war in Iran could lead to more stubborn inflation as well as higher interest rates than what the market is currently anticipating.
Dimon’s letter was released Monday in conjunction with JPMorgan’s annual report for 2025 and said that the Iran war may cause energy shocks along with disruptions to global supply chains that could cause inflation to remain higher than expected.
Inflation that persists above the Federal Reserve’s 2% and rises further from its already elevated level could also prompt the central bank to raise interest rates to slow the pace of price growth.
“Now, because of the war in Iran, we additionally face the potential for significant ongoing oil and commodity price shocks, along with the reshaping of global supply chains, which may lead to stickier inflation and ultimately higher interest rates than markets currently expect,” Dimon wrote.
Dimon said that the foremost risks facing financial markets and the economy are geopolitical in nature, including the Iran war and Russia’s war in Ukraine, as both conflicts have an “impact on countries and economies across the globe that are not directly involved in war.”
“Nations that are heavily dependent upon imported energy are already seeing the effects. And it’s not just energy, it’s commodity products that are byproducts of oil and gas, like fertilizer and helium. And given our complex global supply chains, countries are experiencing disruptions in shipbuilding, food and farming, among others,” Dimon wrote.
“The outcome of current geopolitical events may very well be the defining factor in how the future global economic order unfolds – then again, it may not,” he added.
Dimon said that while the most important outcome of those conflicts should be the “proper resolution of the current wars and, ultimately, peace on Earth, we do need to understand and track the economic effects” of those conflicts and the risks they pose.
He said that a “bad confluence of events” can generally cause some degree of a recession accompanied by high credit losses and market volatility, as well as lower asset prices and elevated unemployment, though it could play out in different ways in different places.
“There are some scenarios that would result in a recession, which generally reduces inflation, and other scenarios that would lead to a recession with inflation (stagflation – where inflationary forces overcome deflationary ones),” Dimon said.
“The skunk at the garden party – and it could happen in 2026 – would be inflation slowly going up, as opposed to slowly going down,” he added. “This alone could cause interest rates to rise and asset prices to drop. Interest rates are like gravity to almost all asset prices. And falling asset prices at one point can change sentiment rapidly and cause a flight to cash.”
Dimon said it’s too early to tell how the Iran war will play out and what it means for the region’s balance of power, and said that the Iranian regime has fomented terrorism around the world while also violently repressing its own populace.
“Time will tell whether the current war in Iran achieves our short-term and long-term objectives in the region and at what cost. We should not turn a blind eye to the role the current regime in Iran has played in fostering terrorism and killing thousands of people, including Americans and many of its own citizens, over many years,” he said.
“That threat must be addressed in an appropriate manner (by those who have more intel and knowledge than I do) – and urgently if Iran ever acquires a nuclear ballistic missile. Nuclear proliferation remains the gravest threat to the future of mankind,” Dimon wrote.
