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    Siegel Warns of a Potential Economic Disaster if Fed Rate Hike is Too High

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    With the Federal Open Market Committee meeting looming this week, Jeremy Siegel, an economics professor at the Wharton School, warned of a potential economic disaster if the Fed goes ahead with a rate hike higher than expected.[0]

    Siegel said that inflation was falling rapidly, and that officials needed to soften policy to avoid a recession.[0] He predicted that the Fed should not exceed a 25 basis-point rate increase, as a higher increase could be “a disaster”.

    The 425 basis-point rate hike last year was an effort to control inflation, but critics argue that the central bank is in danger of overdoing it and pushing the economy into a recession.[0] Others have argued that the Fed needs to keep a vigilant eye on prices to avoid a rebound in inflation, but Siegel believes that the shrunken money supply should prevent this from happening.[1]

    Overall, with so much bearishness in the market, any good news such as the inflation news is seen in a positive light.[2] It remains to be seen what the Fed will decide when they meet this week, and whether their decision will be a disaster or a boon for the economy.

    0. “Wharton professor Jeremy Siegel says the Fed risks sparking a disaster if it hikes rates higher than markets a” Business Insider India, 30 Jan. 2023, https://www.businessinsider.in/stock-market/news/wharton-professor-jeremy-siegel-says-the-fed-risks-sparking-a-disaster-if-it-hikes-rates-higher-than-markets-are-expecting-at-its-upcoming-meeting/articleshow/97454517.cms

    1. “The Fed risks sparking a disaster, Wharton's Jeremy Siegel says” Markets Insider, 30 Jan. 2023, https://markets.businessinsider.com/news/stocks/jeremy-siegel-recession-warning-fed-inflation-disaster-interest-rate-hikes-2023-1

    2. “Fed Must Do 2 Things To Maintain S&P 500 Rally Or ‘No Way That Stocks Are Going to Make It': Jeremy Siege” Benzinga, 29 Jan. 2023, https://www.benzinga.com/news/23/01/30615269/fed-must-do-2-things-to-maintain-s-p-500-rally-or-no-way-that-stocks-are-going-to-make-it-jeremy-sie

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