"I think a soft landing is still possible -- if the Fed sees the light," Jeremy Siegel, University of Pennsylvania Wharton School professor emeritus, says during an interview on "Bloomberg Markets: The Close."...(read more)
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Inflation Down, Fed Will Pivot Soon: Wharton's Siegel Inflation, as measured by consumer prices, has been on a downward trajectory in recent months, indicating that price pressures on goods and services are easing. This development has led many economists to predict that the Federal Reserve will soon shift its focus from controlling inflation to stimulating economic growth. One prominent economist who shares this viewpoint is Jeremy Siegel, a finance professor at the Wharton School of the University of Pennsylvania. Siegel believes that the decline in inflation, combined with other economic factors, will prompt the Fed to pivot its policy stance sooner rather than later. Siegel points to the fact that inflation has been consistently below the Fed's target of 2% in recent months, suggesting that price pressures are not a major concern at the moment. In fact, the latest data shows that consumer prices rose by just 1.4% in November compared to the previous year, further supporting the argument that inflation is on a downward trend. Furthermore, Siegel highlights the weakening labor market as another factor that will influence the Fed's decision. With unemployment rates still elevated, wage growth has been slow, leaving little room for companies to increase prices without hurting demand. This combination of low inflation and weak job market conditions provides the Fed with ample justification to shift its focus towards promoting economic growth. Siegel argues that the Fed's approach to monetary policy will likely change in the coming months. Currently, the central bank is engaged in a massive bond-buying program and keeping interest rates near zero to support the economy during the pandemic. However, as inflation remains muted and the labor market struggles, Siegel believes the Fed will start tapering its bond purchases and gradually raise interest rates to foster a stronger recovery. The anticipated shift in policy by the Fed has implications for businesses, investors, and consumers alike. For businesses, a pivot in monetary policy could mean that borrowing costs may rise, potentially impacting investment decisions. Investors may need to reassess their portfolios as interest rates move higher, potentially leading to shifts in asset allocations. And for consumers, rising interest rates could impact borrowing costs for mortgages, auto loans, and credit cards. However, Siegel remains optimistic about the overall economic outlook despite these potential changes. He argues that a pivot in monetary policy will be a sign of economic resilience and confidence in the recovery. As long as inflation remains low and the labor market struggles, the Fed's commitment to fostering growth through its policy adjustments should be seen as a positive move. In conclusion, the recent decline in inflation and the ongoing weak labor market are driving expectations of a policy pivot by the Federal Reserve. Wharton's Jeremy Siegel believes that the central bank will soon shift its focus from controlling inflation to stimulating economic growth, potentially tapering its bond-buying program and raising interest rates. Although this shift may have implications for businesses, investors, and consumers, it is ultimately a sign of confidence in the strength of the recovery. https://inflationprotection.org/whartons-siegel-predicts-fed-pivot-as-inflation-rates-decline/?feed_id=134898&_unique_id=64fe567f02d6e #Inflation #Retirement #GoldIRA #Wealth #Investing #Bloomberg #InvestDuringInflation #Bloomberg
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