Jeremy Siegel, a long-term bull on U.S. stocks and a professor of finance at the Wharton School of Business, expressed concern on Monday (29th) that he is worried that the Federal Reserve (Fed) policy will have the risk of excessive interest rate hikes, because it is not clear that Fed Chairman Powell is observing. Which inflation indicators will determine the rate hike.
Siegel said in an interview that Powell did mention that the indicators referenced by monetary policy are lagging behind, so if Powell insists on the official data inflation rate falling to 2%, then he will inevitably tighten monetary policy too much , making the same mistake of being too slow in restricting liquidity in 2021 and early 2022.
Siegel also said that 90% of the price indicators released in the past month were lower than market expectations. Siegel reiterated that the Fed should raise rates by another 4 yards (100 basis points) before starting to cut rates in 2023 as economic growth slows.
Fed Chairman Jerome Powell said last week in a speech at the annual meeting of central banks in Jackson Hole that the Fed’s job of reducing inflation has not been successful and will continue to raise interest rates for a while, warning that the U.S. economy will face “some pain” ahead. He also mentioned that historical experience, the Fed is worried regarding prematurely halting interest rate hikes, and the labor market is more likely to be hit more powerfully.
US Democratic Senator Elizabeth Warren (Elizabeth Warren) said on Sunday (28th) that the Fed is likely to raise interest rates once more to curb high inflation, and she is very worried that the US economy will fall into recession as a result. Warren doesn’t think raising interest rates will do much, noting that none of the tools at Ball’s disposal would directly address these issues, which Ball acknowledged.
