The boss of the US bank JP Morgan has warned that the world could be facing the most dangerous moment since the second world war, putting lives and economic growth at risk. In his annual letter to investors, Jamie Dimon said the world had been “generally on a path to becoming stronger and safer” in recent years but had suffered a major reversal in February 2022 when Russia invaded Ukraine. “When terrible events happen, we tend to overestimate the effect they will have on the global economy,” Dimon said. “Recent events, however, may very well be creating risks that could eclipse anything since world war II – we should not take them lightly.” The Wall Street banking boss did not mention Israel’s assault on Gaza in recent months, but said the “abhorrent attack on Israel and ongoing violence in the Middle East” had also “punctured many assumptions about the direction of future safety and security, bringing us to this pivotal time in history”. In a wide-ranging letter to investors covering everything from politics and artificial intelligence to interest rates, Dimon warned that the breakdown in international relations “may end up having virtually no effect on the world’s economy or it could potentially be its determinative factor”. He added: “The ongoing wars in Ukraine and the Middle East could become far worse and spread in unpredictable ways. Most important, the spectre of nuclear weapons – probably still the greatest threat to mankind – hovers as the ultimate decider, which should strike deep fear in all our hearts. “The best protection starts with an unyielding resolve to do whatever we need to do to maintain the strongest military on the planet – a commitment that is well within our economic capability.” It follows similar warnings from the International Monetary Fund, which in December said the global economy was on the brink of a second cold war that could “annihilate” progress made since the collapse of the Soviet Union. Gita Gopinath, the IMF’s first deputy managing director, said at the time that the world was at a “turning point” as tensions mounted between the most powerful nations, and that the accelerating fragmentation of the world economy into regional power blocs – centred around the US and China – risked wiping out trillions of dollars in global output. “If we descend into cold war two, knowing the costs, we may not see mutually assured economic destruction. But we could see an annihilation of the gains from open trade,” she said. Dimon warned that a surge in government spending – linked not only to higher military expenditure but also climate transition plans, healthcare costs and shifting global supply chains – could lead to “stickier inflation and higher rates than markets expect”. JP Morgan, he said, already had contingency plans in place for US interest rates – which are now in a range of 5.25% to 5.5% – to rise higher than 8%, or fall as low as 2%. “We have ongoing concerns about persistent inflationary pressures and consider a wide range of outcomes to manage interest rate exposure and other business risks,” he added. The IMF on Monday warned the world’s most powerful central banks against keeping interest rates high for too long. The Washington-based fund said the Bank of England should be wary of keeping current high borrowing costs because of a higher proportion of UK homeowners on a fixed-rate mortgage than in some countries, which had weakened the impact of ratcheting up interest rates. It comes after the Organisation for Economic Co-operation and Development, a member body including 38 of the world’s leading democratic economies, said food prices across the world’s richest nations rose in February at the slowest rate since before the Russian invasion of Ukraine. It could help fuel several interest rate cuts this year, although analysts have become more cautious in recent weeks about the extent of any reductions.