Jeremy Siegel Says Fed Should Raise Rates Next Week Despite Selloff Risk
Wharton School finance professor Jeremy Siegel mentioned he expects the Federal Reserve to lift rates of interest subsequent week, as oil costs and long-term bond yields preserve climbing.
Siegel advised CNBC’s “Closing Bell” that holding charges regular would danger the credibility of Fed Chair Kevin Warsh, who took over the central financial institution in May 2026.
Fed’s Warsh Faces a Credibility Test
Siegel mentioned monetary markets routinely check new Fed chairs, and referred to as subsequent week’s assembly that check for Warsh. Even so, he mentioned, President Donald Trump has pushed publicly for decrease charges.
“I believe he’s going to chew the bullet and lift charges as a result of if he doesn’t elevate charges, I believe there is likely to be 4 or 5 or perhaps six dissents, which might be unprecedented,” Siegel said.
He pointed to Fed Governor Christopher Waller’s inflation threshold. A month-to-month core studying close to 0.2% may assist a maintain, Siegel mentioned. A 0.3% print, he added, would tilt the committee towards a hike.
Warsh’s hawkish Jackson Hole speech final month already pushed hike odds increased. The 10-year Treasury yield has since climbed towards 4.90%, its highest level since 2023. Brent crude, in the meantime, has pushed previous $100 a barrel.
Fresh inflation information lands simply earlier than the Fed meets. Siegel mentioned this week’s shopper worth index report may nonetheless shift the committee’s pondering both manner.
A Selloff, Then a Recovery
Siegel predicted markets would react sharply and dump instantly after a hike announcement. He then expects long-term bonds to rally as traders view the Fed as credible on inflation, lifting shares in flip.
Rising power prices stay the larger near-term danger to sentiment, Siegel mentioned. Gasoline futures may climb one other 20 to 30 cents, pressuring shoppers this fall.
Siegel expects shares to remain rangebound over the subsequent few weeks. He pointed to the subsequent earnings cycle, as soon as the quarter closes, because the market’s following catalyst.
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