Wharton professor Jeremy Siegel called for an emergency 75 basis-point cut in the federal funds rate following Friday’s disappointing jobs report. Siegel, speaking on CNBC’s “Squawk Box,” suggested another 75 basis-point cut at the Federal Reserve’s September meeting, arguing that the current rate should be between 3.5% and 4%.
The Federal Reserve recently kept interest rates at 5.25% to 5.5%, despite higher-than-expected unemployment rates and significant progress in reducing inflation. Siegel criticized the Fed’s inaction, emphasizing that the unemployment rate of 4.3% surpasses the Fed’s target, and called for immediate rate reductions to address economic concerns.
Siegel dismissed fears that an emergency rate cut would destabilize markets, predicting instead that markets would react positively. He cited historical precedent, such as Alan Greenspan’s emergency rate cut in 2001, to support his claim that the market knows better than the Fed and would welcome decisive action to lower rates.
