Updates - Inflation

Fed is ‘way too tight’ and will have to consider cutting rates in 2023, says Wharton’s Jeremy Siegel

Jesse Pound
CNBCDecember 15, 2022

The Federal Reserve is going too far in its fight against inflation and will be under pressure to reverse course next year, according to Wharton School of Business professor Jeremy Siegel. But Siegel pointed out that the Fed had repeatedly changed its forecast over the course of this year and can do so again. “I think they’re going to be exactly wrong in the opposite direction,” Siegel said on CNBC’s “They were way too loose before — the funds

Siegel doesn’t think the Fed should hike rates at all at its next meeting, which ends on Feb. 1, but said that central bankers may get in one more hike before the discussion turns to when they will cut. “Even though Chairman Powell said we’re not even talking about lowering rates, you can be sure that next year they’re going to be talking about lowering rates,” Siegel said.

The Wharton professor also criticized the Fed’s approach to inflation data. He said that Jerome Powell’s comments about rising wages and a shrinking labor supply are “totally inconsistent,” and that the central bank was not putting enough weight on recent inflation reports and signs that the housing market is rolling over. “We’ve got to get out of this year-over-year look at inflation. … We’re getting 11 months of old data, and only one month of new data,” Siegel said.