Siegel urges Fed to raise rates next week
Wharton professor Jeremy Siegel urged the Fed to raise rates next week, warning that holding would harm Chair Kevin Warsh’s credibility as oil and long-term yields climb.
Jeremy Siegel, a finance professor at the Wharton School, urged the Federal Reserve to raise interest rates at next week’s policy meeting. He warned that keeping rates unchanged would damage the credibility of Fed Chair Kevin Warsh, who took office in May 2026.
Siegel made the remarks in an interview and framed the meeting as an early test for Warsh. He noted public pressure from President Donald Trump for lower rates but expected Warsh to act. “I think he’s going to bite the bullet and raise rates because if he doesn’t raise rates, I think there might be four or five or maybe six dissents, which would be unprecedented,” he warned.
He pointed to signals from within the Fed, including Governor Christopher Waller’s stated inflation threshold, and explained how incoming consumer price data could shape the vote. A monthly core consumer price index reading near 0.2% could support a decision to hold, while a 0.3% print would “tilt the committee toward a hike,” he noted.
The next CPI report arrives just before the policy meeting. Recent market moves have increased pressure on the Fed: the 10-year Treasury yield has climbed toward 4.90%, its highest level since 2023, while Brent crude has risen past $100 a barrel. Siegel warned that higher energy costs could hurt consumer sentiment and estimated gasoline futures could rise another 20 to 30 cents, adding pressure to household budgets this fall.
Siegel predicted markets would react sharply to a rate increase, with an initial selloff followed by a rally in long-term bonds as investors conclude the Fed is serious about fighting inflation. He added that bond stabilization would lift stocks after the initial drop and that equities were likely to trade in a range over the coming weeks. He pointed to the upcoming earnings cycle, once the quarter closes, as the next market catalyst.
Investors and policymakers will watch Warsh’s leadership and the committee’s response to the CPI reading when deciding whether the Fed will tighten policy at next week’s meeting.
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