Last week the US Federal Reserve (Fed) raised interest rates by 3 yards, taking the benchmark interest rate to 3% to 3.25%, the highest since the 2008 financial tsunami, and reported which will continue to raise interest rates to curb inflation. Jeremy Siegel, a long-term bull on US equities and a finance professor at the Wharton School of Business, criticized the fact that the Fed is making one of the biggest mistakes in its 110-year history that could lead to a deep recession.
Siegel said the Fed is making one of its biggest mistakes in its 110-year history. inflation.
Siegel said he was concerned about the risk of excessive rate hikes by the Fed policy. If Fed Chairman Powell insists that the inflation rate of official data drop to 2%, he will inevitably tighten monetary policy excessively, committing himself in 2021 and early 2022. Same mistake of being too slow to limit liquidity.
Siegel said that when all commodities are rising rapidly, the Fed and Powell say there is no inflation in sight and they see no need to raise interest rates in 2022. Now, when prices for the same commodities and activity is falling, the Fed says stubborn inflation will keep it tight until 2023. Siegel said he couldn’t understand such an approach.
Siegel believes that the Fed’s approach will lead to a painful recession in the United States and the working class and middle class will pay the price.
Powell said at the annual central bank meeting in Jackson Hole that the Fed’s work to reduce inflation has been unsuccessful and will continue to raise interest rates for some time, warning that the US economy will face “a little. of suffering “in the future. He also mentioned the historical experience, the Fed is worried about stopping interest rate hikes prematurely and the job market is more likely to be hit more powerfully.
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