Wharton Professor, Who Elon Musk Once Sided With, Says Fed’s ‘Higher For Longer’ Signal Scaring Markets: ‘Have To Bring Rate Down A Lot In 2023’

Wharton Professor of Finance Jeremy Siegel, who slammed the Fed in no uncertain terms following its third straight 75-basis-point rate hike in September, took potshots at the central bank yet again.

What Happened: Siegelwas replying to a questionon CNBCs Squawk Box about the implication of a potential 150-basis-point hike in the next two months.

"I would call for 50 now and then a stop," says Jeremy Siegel about Fed rate hikes. "I think they're going to have to bring the rate down a lot during 2023. I think we're gonna have the second biggest housing price decline of the post-WWII period over the next 12 months." pic.twitter.com/jU6l0G9VuG Squawk Box (@SquawkCNBC) October 17, 2022

Siegel said he wouldnt mind a stop since he believes that if the Fed waits, it would be able to assess how inflation has come down. Everything that is sensitive to changes in the price of goods has decreased, and it should eventually come down for the services sector, he added.

See Also:Why The Fed Needs To 'Break The Labor Market' To Avoid A 'Wage-Price Spiral

I worry about the idea well stay in the high 4s, Siegel said.

I think they are going to have to bring down the rate down a lot during 2023, Siegel said.

The finance professoradded that Fed Chair Jerome Powells higher for longer approach was scaring markets, as the market would think the rates are going to pinch.

The rates are already pinching the interest-rate-sensitive part of our economy, he noted.

Siegel foresees the second-biggest house price decline of the post-World War II period over the next 12 months. Thats a very significant factor for wealth, equity and housing markets, he added.

So they got to slow down and wait and see what the tightening has already wrought on the economy, Siegel said.

In September, when he voiced his concerns that the Fed is acting real tough guys until they crush the economy, Tesla Inc. TSLA CEO Elon Muskchimed in and said, Siegel is obviously correct.

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