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Jeremy Siegel Alt

Portfolio > Economy & Markets

Jeremy Siegel: Fed's Powell Should Apologize to Americans

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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.

“The interesting this is I looked back a year ago [in] September, it was exactly as tight as it is today and he never said anything about inflation,” he said, asking, “What’s caused him to change his mind” with the same JOLTs data and other data points declining.

What has suddenly made inflation a threat “when a year ago when everything was booming he said inflation was no threat?” Siegel added.

“Honestly Chairman Powell, I think, should offer the American people an apology  for such poor monetary policy that he’s pursued and the Fed has pursued over the last two years.”

Siegel excoriated the Fed last week as well, telling a CNBC host he was “very upset” after remarks Powell made Friday.

“They were way too easy … and now, oh my God, you know, we’re going to be real tough guys until we crush the economy,” he said.

There’s no need to pursue such a tight monetary policy now, because “the inflation has basically stopped,” Siegel said in the earlier interview.

“On the ground, all the prices are going down. The only thing that’s not going down is wages, and by the way, wages are in a catch-up mode. Don’t argue they’re pushing inflation, they’re lagging inflation,” he said.


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