Wharton's Jeremey Siegel on Monday called on the Federal Reserve to cut the federal funds rate by 75 basis points immediately after Friday's disappointing labor market report, CNBC reports.
In addition, there should be "another 75 basis point cut at the September meeting – and that's the minimum," said Jeremy Siegel, professor emeritus of finance at the Wharton School of the University of Pennsylvania.
"The Fed's interest rate should be between 3.5 percent and 4 percent at the moment," he emphasized.
A move by the U.S. central bank between meetings would be unusual, though it has happened in the past.
"How far have we moved the federal funds rate?" Zero. It makes no sense at all," Jeremy Siegel said, noting that inflation has already reached 90 percent of the Fed's target level.
At the same time, he is not worried that emergency cuts will push markets lower. In fact, Jeremy Siegel believes the market will welcome the cuts and "shoot up."
For example, Fed Chairman Alan Greenspan made an emergency cut of 50 basis points in early 2001 after leaving interest rates unchanged at the December 2000 meeting — and the market rallied, he recalled.
"Don't assume the Fed knows anything. Since when does the Fed know anything about the economy? The market knows much better than the Fed. They have to react," said Emeritus Professor of Finance at the Wharton School of the University of Pennsylvania.
Jeremy Siegel predicts that if the Fed does not make emergency tapering before the September meeting, the market will react badly.
"If they are as slow to go down as they are to go up, which by the way was the first policy mistake in 50 years, then there will not be good times for this economy," he concluded.
