Key Points:
Siegel’s call comes at a time of increasing economic uncertainty, inflationary pressures, and market volatility, which are keeping investors and policymakers awake at night. The professor’s recommendations that some resolute action be taken toward stabilizing the economy and boosting confidence in the financial system come at a very good time.
Read more: Japan’s Nikkei Drop 14%: Worst One-Day Plunge Since 1987!
Cuts of 1.5% points over two months will give real impetus to activity. If the reduced cost of borrowing increases consumer spending and business spending, as Siegel feels, that would dampen the risk of a recession. He said the aggressive measure was required to offset the current headwinds in the economy and boost a more full-blowout recovery.
Critics warn that an aggressive rate cut can lead to spillover effects, asset bubbles, and financial instability. They urge a more cautious approach so that while the need for economic support is met, the economy is not overstimulated.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing. |
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