Updates - Inflation

Jeremy Siegel Sees the Fed Lowering Rates by Year-End

Brandon Sapienza
Bloomberg
May 5, 2023

The Federal Reserve will lower interest rates by the end of this year, University of Pennsylvania’s Wharton School of Business professor Jeremy Siegel said in an interview with CNBC.  Siegel said he believes that pressure is on the Fed to cut rates, especially if wages dip and the labor market cools too fast.

“If they see those payrolls are negative and unemployment rates go up, there will be a lot of pressure on Chairman Powell to say, ‘hey listen, maybe you should think about cutting those rates,’” Siegel said. “I still think they will be cut by year end.”

His comments come after the latest jobs data shows nonfarm payrolls in the US increasing by 253,000 in April.

Hot Jobs Report Raises Odds Fed Keeps Rates Higher for Longer. Siegel said he believes it will take a lot for the Fed to consider another rate increase. “I think the bar is very high for the Fed to do another increase,” Siegel said on CNBC. “I think you would have to see the next employment report to be very strong, even stronger than this one.”

Siegel also said markets are “very strong” despite headwinds stemming from the banking sector. He said that he doesn’t believe a banking crisis is taking place, warning of only “impaired” profits for regional banks that are in the commercial lending business.