The Federal Reserve should listen to the market’s concerns about the economy, Wharton finance professor Jeremy Siegel told CNBC on Thursday.
The central bank raised rates by a quarter point on Wednesday and lowered its projections from three to two increases for 2019. It also said it would continue to shrink its balance sheet at the current pace.
Siegel said he was “shocked” by the Fed’s statement.
“This isn’t good. They barely acknowledged any slowdown,” Siegel said on “Power Lunch.”
The Fed looks at U.S. data, which Siegel called “quite good” and he added it doesn’t take into account the global economic situation unless it directly influences the U.S. However, Wall Street does both.
While the Fed lowered its 2019 projections to 2 increases, the futures market lowered its to “barely one,” he noted.
“They are behind the curve, they’re behind what the fears of the market are,” Siegel said.
Stocks plunged on Wednesday after the market realized the Fed sounded like it wasn’t ready to pull back much from its tighter policy path. The sell-off continued on Thursday.