A great American economist accused Federal Reserve Bank Committing one of the biggest political mistakes of its 110 years of history, considering that the economic crisis that looms on the horizon today is only the result of the great mistake made in the last two years.
“The past two years have been one of the biggest policy blunders in the Fed’s 110-year history to stay too quiet when everything was going well,” said Jeremy Siegel, professor of economics at the University of Pennsylvania’s Wharton School. .
Commenting on what happened in the markets last Friday, Siegel said: “Last year the Fed made a huge policy mistake by not moving to tighten monetary policy before inflation lost control.”
According to an interview with CNBC, which was seen by Al Arabiya.net, Siegel mocked the Federal Reserve, as well as Federal Reserve Chairman Jerome Powell for its insistence that inflation would quickly vanish on its own.
Now, Siegel said, the Fed is making another mistake by raising interest rates and tightening monetary policy too much.
He continued: “When all commodities rose at rapid rates, President Powell and the Federal Reserve said we don’t see any inflation. We don’t see any need to raise interest rates in 2022, and now that the prices of all commodities and assets are falling, he will say stubborn inflation demands it, calls for tightening until 2023.
As a result of all this, Siegel said, the central bank is making middle-class and working-class Americans pay for what it expects to be a punitive recession.
Instead of continuing to raise interest rates until inflation drops back towards the central bank’s 2% target, Siegel said the Fed should let lower commodity prices take over more. burden of fighting inflation.
Crude oil prices fell sharply from highs reached earlier this year as US crude fell $ 4.75, or 5.7%, on Friday to settle at $ 78.74 a barrel, the level. lowest since January 10, 2022.
“I think the Fed is too tight,” Siegel added. “They are making the exact same mistake on the other side that they made a year ago.”
The professor also criticized the Federal Reserve for trying to raise the unemployment rate and said that it is not the workers who are driving the inflation with higher wages, they are just trying to catch up.
Siegel’s comments caused controversy among US economic followers, with many commenting on Twitter to agree with his assessment that the Fed was wrong to keep the policy too broad for too long.
One commentator said the past three years of Fed policy are likely not to be respected by historians.
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