Siege Predicts Stock Sell-Off If Fed Fails to Hike Rates

Jeremy Siegel, chief economist at WisdomTree, warns that stocks could drop if the Federal Reserve does not raise interest rates. He believes the market is signaling a rate hike and that new Fed chair Kevin Warsh may need to 'bite the bullet' despite potential political backlash.

Siegel anticipates an initial sell-off in the stock market, but expects it to recover if the long bond market reacts positively to a rate increase. He thinks this could restore market confidence in the Federal Reserve's commitment to combating inflation.

The forthcoming Consumer Price Index (CPI) data may offer some reassurance to decision-makers at the Fed. Siegel is not alone in his views, as Claudia Sahm, a former Federal Reserve economist, also believes a rate hike would be an 'appropriate policy' for the upcoming meeting.