Wharton’s Professor calls for a 100 bps increase in interest rates


Wharton’s Professor calls for a 100 bps increase in interest rates

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Wajeeh Khan

May 11, 2022

U.S. consumer price index stood at 8.3% in April versus 8.1% expected.

Professor Jeremy Siegel warns the next CPI report could be terrible.

The Wharton School expert calls for a 100 bps increase in interest rates.

U.S. inflation remained above 8.0% in April, which, as per Professor Jeremey Siegel of the Wharton School, calls for the central bank to be more aggressive than it has indicated.

Highlights from Professor Siegel’s interview on CNBC

Professor Siegel quoted the housing market as he warned the CPI prints were unlikely to get meaningfully better in the coming months. This afternoon on CNBC’s “Halftime Report”, he said:

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The housing sector, which is so important for the CPI, it’s very lagged in the way it computed into the index. That’s going to lift the index for the next six to nine months. So, we have a lot of inflation that hasn’t actually shown up in the index yet.

The Professor of Finance reiterated that the U.S. central bank launched its response to inflation a bit too late.

The next CPI report could be terrible

According to Professor Siegel, gas prices will weigh significantly on the next CPI report. The commodity is currently trading at levels last seen during the great financial crisis of 2008.

I’d like to see the Fed say we could go a 100 bps; we’ll be serious about this inflation. After an initial sell-off, I think the market would rally knowing the central bank is protecting our currency, which is what we need.

Despite inflation still running at about a forty-year high that has the Nasdaq Composite down nearly 27% year-to-date, a Jefferies analyst this morning said there were multiple silver linings in tech stocks.

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