After the U.S. economy created many fewer jobs than expected in July and the stock market tumbled, some are speculating that an emergency Fed meeting could be called. Such a meeting would allow the central bank to cut its benchmark interest rate before its next scheduled meeting on Sept. 17.
Professor Siegel Calls for an Emergency Fed Meeting
Wharton Professor Jeremy Siegel — a prominent, well-respected stock-market forecaster — this morning called for the Federal Reserve to hold an emergency meeting. Speaking on CNBC, the professor said that the Fed should immediately cut its benchmark rate by three-quarters of a percentage point or 75 basis points. He believes that the benchmark, known as the “Fed funds rate,” should be “somewhere between 3.5% and 4%.” The Fed funds rate currently stands at 5.25% to 5.5%.
At its last meeting, which concluded on Aug. 1, the Fed kept the rate unchanged, although the bank’s chairman, Jerome Powell, repeatedly stated that a rate cut was “on the table” for the September meeting.
Speaking of the September meeting, Siegel believes that, following the emergency Fed meeting and 75 basis point cut that he’s seeking, the central bank should reduce its benchmark rate by another 75 basis points in September.
A Fed Member Weighs in on the Economy
Also appearing on CNBC this morning, Chicago Federal Reserve president Austan Goolsbee refused to respond to a question about whether an emergency Fed meeting could be held.
But he did promise that the central bank would seek to boost the economy if data continues to indicate that it’s struggling. And noting that the Fed’s interest rate is currently “restrictive,” the economist said that the central bank would probably reconsider its stance if the economy is not overheating. Goolsbee, however, added that he does not believe that the U.S. is in a recession.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
