Wharton’s Jeremy Siegel calls for a 75 basis point emergency cut to the Federal Reserve’s interest rates.
Siegel recommends a second 75 basis point cut at the Fed’s September meeting to stimulate growth.
Former Kansas City Fed President Thomas Hoenig suggests CPI data could justify an interim rate cut.
Wharton School Professor Jeremy Siegel has made a bold call for substantial cuts to the Federal Reserve’s interest rates. Siegel suggests an emergency cut of 75 basis points in the Fed funds rate, followed by another 75 basis point cut at the September meeting.
He believes these aggressive cuts are essential to stabilize the economy and promote growth. His proposal highlights the urgency of the current economic situation and the need for decisive action.
"I'm calling for a 75 basis point emergency cut in the Fed funds rate, with another 75 basis point cut indicated for next month at the September meeting – and that's minimum," says Wharton's Jeremy Siegel: pic.twitter.com/s4CgWx962Q
— Squawk Box (@SquawkCNBC) August 5, 2024
Siegel’s proposal comes as the economy faces heightened uncertainty. Many economic indicators suggest potential slowdowns in growth. Siegel argues that these rate cuts are necessary to address these challenges and boost economic activity. He stated that the Fed funds rate should be between 3.5% and 4%, significantly lower than the current target range of 5.25% to 5.5%. In his interview with CNBC, In his interview with CNBC, Siegel emphasized the importance of immediate action:
I’m calling for a 75 basis point emergency cut in the Fed funds rate, with another 75 basis point cut indicated for next month at the September meeting – and that’s minimum.
Siegel’s call for aggressive cuts is much larger than typical adjustments seen in recent years. This reflects the urgency he sees in addressing the economic challenges. By lowering interest rates, Siegel hopes to boost confidence in the market. Lower borrowing costs could encourage businesses to invest and consumers to spend, thereby stimulating the economy.
Former Kansas City Fed President Thomas Hoenig also weighed in on the potential for rate cuts. He suggested that lower CPI numbers this month could provide a rationale for an interim cut. These remarks highlighted the ongoing debate among economists and policymakers about the best course of action to support the economy.Meanwhile, in the cryptocurrency market, Peter Schiff criticized some analysts’ understanding of Bitcoin ETFs. Schiff pointed out the difference between the percentage decline in Bitcoin ETFs and spot Bitcoin. He emphasized that the spot decline omits the Saturday decline, arguing there is no arbitrage opportunity. This highlights the complexities in the cryptocurrency market and the need for accurate understanding among analysts.
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