Identifiable Risks of JP Morgan Chase Recently, the Federal Reserve has increased the federal funds rate and intends on continued gradual increases of this rate because of the sustained improvement in economic outlook. These gradual increases in monetary policy are believed to strengthen both economic activities and labor markets, while keeping inflation consistent. As a financial firm that is tied into capital markets, JP Morgan Chase is susceptible to risk due to these changes. In this scenario, the Fed is practicing contractionary monetary policy in which they are influencing money supply and rates to decrease, slowing down spending (Amadeo, 2019). First and foremost, JP Morgan Chase will be subject to risk due to the new federal funds rate. This rate impacts JP Morgan Chase's costs in borrowing funds to keep reserves at the required level set by the Fed. With increased rates, JP Morgan Chase will be less likely to continue the same level of lending to clients due to the increased costs that it takes on to do this. To go along with the federal funds rate, JP Morgan Chase will also have to identify that it may be at risk of increased reserve requirements. As another tool within the contractionary policy, the Fed has the ability to increase reserve requirements. Increasing these requirements could cause JP Morgan Chase to either increase the interest paid out for its overnight funds, or decrease lending in order to not overdraw on its reserves (JP Morgan Chase, 2019). These together influence the Fed's desired decrease in money supply available to consumers and businesses, negatively impacting JP Morgan Chase's ability to lend (Amadeo, 2019). JP Morgan Chase is also susceptible to the ramifications of increasing its own interest rates that are passed on to borrowers. As the federal funds rate increases, JP Morgan Chase has no other option but to increase its own lending rate. Increasing this rate, although bringing in more profits on interest, has potential to cause fewer loan originations, increased competition, losses on underwriting exposures due to client's inabilities to pay increased rates, and lower net