Today, the Fed funds rate is in a range of 3% to 3.25%, and is expected to sit at 4.5% by the end of this year.
Just one year ago this week, the median expectation for the Fed funds rate sat at less than 1% by the end of 2022 and 1.75% by the end of 2024. To Siegel's point, the Fed has had a lousy record of accurately forecasting where it expects interest rates to be just a few months into the future.
They're making exactly the same mistake on the other side that they made a year ago," Siegel added. "Why is he putting the burden on these working people, on the employed people, when every other commodity price is going down," Siegel said passionately. I mean, workers are trying to get a little bit back of what the inflation happens to be," Siegel said. Don't argue they're pushing inflation, they're lagging inflation. "The only thing that's not going down is wages, and by the way, wages are in catch-up mode. Siegel pointed out that oil prices have fallen back to levels not seen since the start of 2022, prior to Russia's invasion of Ukraine, and home prices and homebuilding activity are starting to fall. We see no need to raise interest rates in 2022.' Now when all those very same commodities and asset prices are going down, he says: 'Stubborn inflation that requires the Fed to stay tight all the way through 2023.' It makes absolutely no sense to me whatsoever, way too tight," Siegel said in an interview with CNBC on Friday. "When we have all commodities going up at rapid rates, Chairman Powell and the Fed said: 'We don't see any inflation. On Wednesday, the Fed raised interest rates by another 75 basis points and said that it expects further rate hikes heading into early 2023, according to its updated dot plot. He said it could be "one of the biggest policy mistakes in the 110-year history of the Fed, by staying so easy when everything was booming."
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