Wharton’s Siegel says Jerome Powell owes ‘the American people an apology’ for poor Fed policy

Siegel said that the Fed is moving too aggressively to fight inflation and will hurt American workers in the process.

The persistently high inflation in 2022 is due in large part to mistakes made by the Fed in the aftermath of the coronaviruses epidemic, which caused economic shutdowns around the world and big drops in global markets.

Siegel said that Chairman Powell should apologize to the American people for pursuing poor monetary policy.

The comments come after another 0.75 percentage point hike from the Fed last week. The rate could jump well above 4% in the coming months according to projections from central bank policymakers.

Siegel said that the Fed should be more concerned about causing a recession than it is about inflation. The Fed is inconsistent with how it uses economic data, according to him.

The job opening and labor turnover data were discussed byChairman Powell. Is it tight? It was as tight a year ago as it is now. He didn't talk about inflation. He changed his mind. Siegel said it's the same data.

For much of this year, inflation has been running at a faster pace than it has in the past. The price of commodities went up because of supply chain issues from Covid and Russia's invasion of Ukraine. Even though the price of oil has fallen, inflation appears to be broadening out.

One source of inflation that worries some economists and policymakers is the threat from rising wages, which can cause a so-called "wage-price spiral", where higher prices spark higher wages, which then reinforce still higher prices.

Siegel said that recent worker raises appear to be "catch-up" rather than a cause of inflation.

I don't think Powell is right to say we're going to crush wage increases when inflation isn't the reason. Siegel said that the inflation was caused by excessive monetary accommodation.