Jeremy Siegel
Scott Mullin | CNBC
Wharton Business School professor Jeremy Siegel no longer believes it is crucial for the Federal Reserve to implement emergency interest rate cuts, but still hopes that policymakers will cut rates quickly and aggressively.
Siegel caused a stir in an interview with CNBC on Monday when he said Federal Reserve Chairman Jerome Powell and his colleagues should Emergency reduction of 0.75 percentage points Now, one more follow-up in September.
The comments came as markets tumbled on fears of an economic recession. The Fed is too slow Accommodative policies are being implemented as inflation has fallen. However, positive data since then and a strong market rally on Thursday have clearly eased the urgency.
“I no longer definitely think it’s necessary. But I would like (Powell) to get rates down to 4% as soon as possible,” Siegel said in a phone interview. “Would it be bad? No. But is it necessary? No, not right now.”
The Federal Reserve voted on July 31 Maintain key interest rates Between 5.25%-5.5%, the decision was quickly criticized as the next day’s weekly jobless claims report showed a surge and manufacturing indicators showed further contraction in the industry.
However, Thursday’s data showed Claims fall Services data earlier this week was also better than expected compared with last week.
“Obviously, I want to make a difference,” Siegel said of his call for action during the meeting. “There’s no way he can do that without things falling apart. I don’t think things will fall apart. But by all standards and all monetary rules … they should be below 4%.”
Market pricing indicates that the Federal Reserve will cut interest rates by at least 25 percentage points in September and possibly one percentage point by the end of 2024.
Siegel said emergency cuts in this situation “are not the way Powell does things.” “But Jay Powell was so slow, especially on the way up, and I just wanted to make sure he didn’t make the same mistake on the way down.”
