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September 28, 2022 at 10:47 AM
What You Need to Know
- The same jobs data that didn't bother the Fed a year ago is cited in its tightening now, Siegel said.
- Forward-looking data indicates prices are falling, despite lagging official government statistics, he argued.
- Siegel questions why Fed didn't consider inflation a problem a year ago.
Federal Reserve Chairman Jerome Powell should apologize to Americans for the central bank’s “poor monetary policy,” Wharton School economist Jeremy Siegel said this week, doubling down on his criticism of the institution’s “extreme” tightening cycle.
“I think they’re talking way too tough,” Siegel said Monday on CNBC’s Squawk Box.
“The Fed’s talk and the tightening is so extreme” that the risk of recession “is much higher” than the odds the central bank will waffle on its inflation-fighting mission, he said. “The Fed’s tightening and their talk of super tightening has just pushed markets way to [the] extreme.”
Siegel has repeatedly denounced the Fed for what he and other critics consider a bungled delay in addressing inflation last year and for this year’s policy to tame soaring prices by aggressively raising the bank’s benchmark interest rate.
The finance professor cited signs that real prices, including home and commodity prices and freight rates, are coming down despite lagging official indicators that suggest persistent high inflation.
Meanwhile, the money supply, a clue to the inflation experienced over the past two years, recently has experienced the most protracted decline since World War II, according to Siegel.
“A year ago in September they said inflation was no problem at all,” Siegel said. Powell cites the job openings and labor turnover survey (JOLTS) report to point to a tight labor market — “how tight it is and how we have to tighten” — Siegel said.
