Wharton professor Jeremy Siegel believes the recent stock market sell-off is a healthy correction brought on by the Federal Reserve's more cautious outlook on future rate cuts.
Wharton business school professor Jeremy Siegel said the stock sell-off on Wall Street was healthy, as the Federal Reserve 's cautionary projection gives investors a reality check. The market was in almost a runaway situation... and this brought them to reality that we are just not going to get as low interest rates as investors were betting on when the Fed started its easing cycle, Siegel said on CNBC's Squawk Box Asia.
The stock sell-off on Wall Street was healthy, as the Federal Reserve's cautionary projection on future rate cuts gives investors a reality check, according to Jeremy Siegel, professor emeritus of finance at University of Pennsylvania's Wharton School.at its last meeting of the year, taking its overnight borrowing rate to a target range of 4.25% to 4.5%. Meanwhile, the Federal Open Market Committee indicated it probably will only lower rates twice more in 2025, fewer than the four cuts indicated in its September forecast.in response to the revised Fed outlook, as investors had been betting on the central bank to stay more aggressive in lowering borrowing costs. 'The market in almost a runaway situation... and this brought them to reality that we are just not going to get as low interest rates' as investors were betting on when the Fed started its easing cycle, Siegel told CNBC's Squawk Box Asia. 'The market was overly optimistic...so I am not surprised at the sell-off,' Siegel said, adding that he expects the Fed to pare back the number of rate cuts next year, with just one or two reductions.There is also a chance of no cut next year, he said, as the FOMC raised its inflation forecast going forward. The new Fed's projections show officials expect the personal consumption expenditures price index, excluding food and energy costs, or core PCE, toSiegel suggested that some FOMC officials may have factored in the inflationary impacts from potential tariff
FEDERAL RESERVE INTEREST RATES STOCK MARKET INVESTORS ECONOMY
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