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“I think we’re giving Powell too much praise. … The last two years are one
of the biggest policy mistakes in the 110-year history of the Fed by
staying so easy when everything was booming.”

— Jeremy Siegel
Wharton professor Jeremy Siegel has a bone to pick with Federal Reserve
Chair Jerome Powell.

The longtime market guru and frequent guest on CNBC unleashed a memorable
rant on Friday as U.S. stocks plunged.

He argued that the Fed made a massive policy mistake last year by not
moving to tighten monetary policy before inflation got out of hand, and he mocked the Fed and Powell for insisting inflation would quickly fade on
its own.

And now, Siegel said, the Fed is making another mistake by raising
interest rates and tightening monetary policy too aggressively.

“When we had all commodities going up at rapid rates, Chairman Powell and
the Fed said, ‘We don’t see any inflation. 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,” Siegel said on CNBC’s “Halftime Report.”

As a result of all this, he said, the central bank is making working- and middle-class Americans pay with what he expects will be a punishing
recession.

Instead of continuing to hike rates until inflation eases back toward the central bank’s 2% target, Siegel said the Fed should let falling commodity prices shoulder more of the inflation-fighting burden. Crude-oil prices
have fallen sharply from their highs reached earlier this year, with West
Texas Intermediate crude CLX22, +0.88% falling $4.75, or 5.7%, to settle
at $78.74 a barrel on the New York Mercantile Exchange Friday, its lowest settlement since Jan. 10.

“I think the Fed is just way too tight,” Siegel added. “They’re making
exactly the same mistake on the other side that they made a year ago.”

The Wharton professor also criticized the Fed for trying to drive the unemployment rate higher. He said workers aren’t the ones driving
inflation with higher wages — they’re just trying to catch up.


Siegel’s rant caught the attention of the CNBC audience, with many chiming
in on Twitter to concur with his assessment that the Fed had erred in
keeping policy too loose for too long.

One Twitter Inc. TWTR, +0.43% user said the past three years of Fed policy likely won’t be well regarded by historians.


Another praised Siegel for bringing the “rage.”


And a third joked that perhaps Siegel and Powell should face off live.


Of course, Siegel isn’t the only market guru arguing that the Fed has made
a major policy mistake.


Stocks finished sharply lower on Friday as all three benchmarks recorded
losses for the week, with the S&P 500 SPX, -1.72% down 1.7% to close
Friday’s session at 3,693.23, just above its lowest close for the year,
which it reached in June. The Dow DJIA, -1.62% wasn’t so lucky, with the blue-chip gauge recording its lowest closing level of the year at
29,590.41. The Nasdaq Composite COMP, +2.62% fell 198.88 points, or 1.8%,
to 10,867.93.

Read: Dow sinks 550 points as rising bond yields hammer stocks after Fed
rate hike


https://www.marketwatch.com/story/whartons-jeremy-siegel-accuses-fed-of- making-one-of-the-biggest-policy-mistakes-in-its-110-year-history- 11663968335?mod=MW_article_top_stories

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