Wharton professor Jeremy Siegel just threw cold water on the interest rate-cut story.

In an interview cited by Seeking Alpha, the veteran economist now foresees the Fed moving toward a rate hike instead of a cut on the back of rising inflation. 

For perspective, markets have spent several months trying to map out lower rates, so that’s clearly a meaningful change in tone.

Siegel’s sharp take is built around multiple pressures that remain tough to dismiss.

He argues that the money supply is growing, commodity prices are continuing to climb, and fiscal policy remains stimulative. At the same time, oil prices remain stuck in the upper $90s.

In that scenario, the Fed doesn’t have much room to start cutting, which is why Siegel is suddenly sounding a lot more hawkish.

Who is Jeremy Siegel?

Veteran economist Jeremy Siegel is one of the voices on Wall Street that every investor still stops to hear.

He currently serves as the Russell E. Palmer Professor Emeritus of Finance at the Wharton School and a senior economist at WisdomTree. That’s a rare blend of academic chops and day-to-day market relevance. 

  • Fidelity delivers sobering interest-rate message amid Fed pause
  • J.P. Morgan pushes back on Fed’s 2026 rate-cut forecast
  • Global central banks signal shocking shift on interest-rate bets

More Federal Reserve: Siegel’s career spans over five decades, with him earning his Ph.D. in 1971, having taught for four years at the University of Chicago, and then retiring to teach full-time in 2021 after over four decades on the faculty.

He is also famous for authoring the popular investing book, “Stocks for the Long Run,” one helping him cement his reputation as a go-to bull-market historian and long-term market thinker. 

Also, he has been a constant voice and familiar face on some of the biggest investing shows, including CNBC and CNN.

Jeremy Siegel says the Federal Reserve may lean toward rate hikes as inflation pressures build again.

Why Siegel is turning hawkish

SMIALOWSKI/Getty Images Siegel argues that the Fed’s problem has essentially now changed.

A few months ago, it was all about when rate cuts might begin.

Now he argues that the mix of inflation forces is robust enough that a rate hike is more likely than a cut, especially given the energy backdrop and rising fiscal pressures. 

On the macro end, Siegel pointed to the relentless increase in money supply, commodity prices, and stronger fiscal and defense spending. He also noted how Delta Air Lines had to budget nearly $2 billion in fuel costs.

“The war in the Middle East has driven an unprecedented spike in jet fuel, with prices roughly double what they were earlier in the year,” said Delta CEO Ed Bastian in the airline’s latest earnings call. “In this environment, our focus is on what we can control, running a reliable operation, taking care of our people and customers, and protecting our margins and cash flow.”

Siegel’s broader point is that inflationary pressures are spreading, with the rationale boiling down to three main things.

  • Inflation inputs are broadening: It is not just one category, as money, commodities, and spending are all moving in the same direction.
  • Corporate costs are rising fast: Delta’s fuel bill underscores how swiftly an oil shock can disrupt margins and consumer prices.
  • Policy flexibility is shrinking: Siegel expects Fed chair Jerome Powell to do nothing at his last meeting, which complicates things for the next chair. 

As a result, particularly for stock and bond market investors, Siegel sees a sideways market that could potentially last two to three months. 

Inflation and energy shock

Siegel’s harder line on interest rates makes a lot more sense if we factor in the latest inflation print.

March CPI wasn’t just hot on the surface; it was struck by an energy shock that began with the Iran War and quickly spread through gasoline, diesel, and broader household costs.

  • Headline CPI ran hot: Consumer prices jumped 0.9% in March, the largest monthly gain since June 2022. At the same time, we saw annual CPI grow to 3.3% from 2.4% in February. 
  • Core inflation was firmer than ideal: Core CPI rose 0.2% month over month and 2.6% year over year, up from 2.5% in February. 
  • Energy was the culprit: Gasoline prices surged a record 21.2% in March, the largest increase since the government began tracking the series in 1967.
  • Oil has been the driver: Reuters reported that the Iran war pushed global crude prices up over 30%, while Brent skyrocketed 64% in March and WTIsupercharged 52%. Source: Reuters

Fed odds and Wall Street calls

Siegel isn’t alone in turning more hawkish. 

The latest market read leans toward fewer cuts, while the big banks remain split between no cuts and delayed easing in the back half of the year. 

  • Markets still lean “higher for longer”: After Friday’s CPI, traders priced in a 64.5% chance the Fed holds through year-end, a 29.8% chance of one 25-basis-point cut, 4.4% odds of a 50-basis-point cut, and 0.3% odds of 75 basis points of easing.
  • Goldman Sachs, BofA, and Barclays still expect two cuts in 2026, but see the first cut in September rather than June.
  • Citigroup has also pushed its rate cut path back to September, October, and December, totaling 75 basis points.
  • Wells Fargo Investment Institute expects zero cuts in 2026, compared with two previously.
  • UBSforecasts two 25-basis-point cuts in September and December, delayed from June and September.
  • JPMorgan CEO Jamie Dimon raised concerns over the Iran war and said that it would mean “higher interest rates than markets currently expect.” Sources: Barron’s, Reuters

Related: Bank of America drops curt 4-word verdict on the economy