Professor Jeremy Siegel argues the Fed is boxed in: near-term inflation and oil-price shock risks make a June cut very unlikely, and a hike is now more plausible than a cut. He also says the current market reaction is being driven less by Fed language than by the surge in oil and gasoline prices, while still believing AI, fiscal/defense spending, and earnings support equities over time.
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This is a WisdomTree office-hours interview format with Kevin Flanigan hosting Professor Jeremy Siegel. The core thesis is straightforward: the Fed is stuck between weaker political pressure for easier policy and a real-world inflation shock from rising oil and gasoline prices, so the near-term bias is more likely to move up than down. Siegel repeatedly emphasizes that the committee’s latest dissents show “no appetite for a cut” and that, unless the economy or labor market deteriorates sharply, a June cut is essentially off the table. He also frames the Fed chair as constrained: the new chair can argue, but he cannot act alone and needs votes that are not there. Siegel’s immediate catalyst is the move in energy prices. …
Near term, the actionable risk is still an energy-led inflation shock: if oil and gas keep climbing, the market should price less Fed easing and more pressure on rate-sensitive assets. Absent a sharp demand break, June easing looks off the table.
Over the next few weeks and months, the base case is a firm Fed stance with markets watching whether growth data stay strong enough to justify no cuts. If oil stabilizes, the AI/earnings bid can reassert; if not, yields likely stay the main headwind.
Structurally, Siegel is arguing for a regime where AI, defense, and fiscal spending support growth and profits even as nominal rates stay higher than the old easy-money era. In that world, equities remain the preferred inflation hedge, while long-duration bonds and cash look less attractive than real assets.
The Fed is more likely to raise rates than cut them over the rest of the year.
Siegel states multiple times that the probability of an uptick is higher than a downtick, though not by a wide margin.
A June rate cut is essentially off the table unless consumers or firms suddenly weaken.
He says there is absolutely no chance of a June cut absent a sharp deterioration in spending or labor data.
The recent dissent pattern suggests there is no appetite for easing at the committee.
He points to three dissents on the bias move and says they show limited support for cuts.
Might the Fed get rid of the dot plots under Walsh?
Seagull says Walsh might, but he thinks it won't happen at the first meeting. He argues the dot plots aren't that informative anyway — you should only look at the next meeting and maybe end-of-year dots. Getting rid of them entirely wouldn't change anything about how rates move up or down.
How about the balance sheet — is reducing it important?
Seagull says changing the rate is 10 times more important than changing the balance sheet. He's been in favor of reducing it but it's not important for what happens to markets in the next three months. The Fed funds rate is the deal — everything else is secondary.
If oil tensions de-escalate and the Strait opens, will we come back to the AI disruption/software story?
Seagull says yes — the AI revolution is already there and is the major secular theme. Oil is overwhelming it right now but AI is real and very positive. It will churn markets but net positive. He notes GDP estimates vary wildly (Goldman at 3.5% vs Bloomberg consensus 2.2%) but most data is strong.
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