Wharton's Jeremy Siegel Says Fed 'Has Our Back' After Jerome Powell Says December Rate Cut Is Not A Given: Report

• Speaking during an interview with CNBC, Siegel highlighted Fed Chair Jerome Powell’s comments during a press conference after the 25 bps rate cut was announced.
• Siegel added that he thinks that as a result of the Fed’s cautious approach, there could be a slowdown in U.S. equities.
• However, he thinks it won’t be enough to stop the bull market.

Jeremy Siegel, professor emeritus of finance at the University of Pennsylvania’s Wharton School of Business, on Thursday reportedly said that the Federal Reserve “has our back,” after the central bank announced a 25 basis point cut on Wednesday along expected lines.

Speaking during an interview with CNBC, Siegel noted that Fed Chair Jerome Powell, during a press conference after the 25 bps rate cut, suggested a data-dependent approach ahead of the next meeting. Powell had expressed concerns that the central bank continues to face two-sided risks, in terms of inflation as well as increased downside threats to employment.

Impact On Equities

Siegel believes that, as a result of the Fed’s cautious approach, there could be a slowdown in U.S. equities. However, he thinks it won’t be enough to stop the bull market.

“The good thing is, I think the Fed has our back. They’re essentially saying, ‘if we do see a slowdown, we will cut. But if we see the strength that we’re seeing right now, we’re going to wait for another meeting and see what happens in January,” Siegel said in the interview.

The Path Ahead

Siegel added that the markets will find comfort in knowing that the Fed is not stubborn in its monetary policy, even if data shows it should lower rates.

After the rate cut announcement on Wednesday, Powell stated that data available prior to the government shutdown indicated that economic growth was on a firmer trajectory than expected.

“In the Committee’s discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a forgone conclusion—far from it. Policy is not on a preset course.”

— Jerome Powell, Chair, Federal Reserve

He noted that post the 25 bps cut, the central bank is well-positioned to respond to potential economic developments.

Meanwhile, U.S. equities were mixed in Thursday morning’s trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.49%, the Invesco QQQ Trust ETF (QQQ) declined 0.96%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) rose 0.52%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘neutral’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was down 0.13% at the time of writing.

Also See: Scott Bessent Says US-China Trade Deal Could Be Signed Next Week, Following Trump-Xi Meeting: Report

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