Siegel explained to CNBC, that while he no longer sees an emergency rate cut as essential, he still believes the Federal Reserve should rapidly reduce rates to 4%. He acknowledged that while an emergency cut wouldn't be harmful, it is not necessary at this time.

This change in perspective came after the Federal Reserve decided on July 31 to maintain its key interest rate between 5.25% and 5.5%. This decision faced criticism, particularly after reports indicated a spike in weekly jobless claims and further contraction in the manufacturing sector. However, subsequent data showing a decrease in jobless claims and better-than-expected service sector readings have alleviated some of the urgency for immediate action.

Siegel's initial call for an inter-meeting rate cut was intended to prompt the Federal Reserve to adopt a more proactive approach. He argued that, based on various criteria and monetary rules, interest rates should be below 4%. Despite retracting his call for an emergency cut, Siegel remains concerned about the pace at which the Federal Reserve is adjusting its policy. He emphasized that Federal Reserve chair Jerome Powell has been too slow in responding to economic changes, both in raising and potentially lowering rates.

Market expectations currently suggest that the Federal Reserve will implement at least a 0.25 percentage point cut in September, with projections indicating a potential reduction of up to a full percentage point by the end of 2024. These expectations have been volatile, as investors closely monitor the Federal Reserve's policy decisions. Siegel noted that an emergency cut is not typical of Powell's approach, but he stressed the importance of avoiding past mistakes by acting too slowly in adjusting rates.

The debate over the necessity and timing of a rate cut has been a significant topic in the financial world. Various experts have weighed in on the potential impact of rate cuts on the economy. For instance, a Benzinga poll revealed that 75% of respondents believe a rate cut could prevent a recession. Meanwhile, economist Claudia Sahm has warned of an increased risk of recession, advocating for potential interest rate cuts. Conversely, JPMorgan CEO Jamie Dimon has expressed skepticism about the Federal Reserve's ability to reduce inflation to its 2% target, predicting a looming recession.

Amidst these discussions, Mohamed El-Erian, chief economic adviser at Allianz, has cautioned against an inter-meeting rate cut, suggesting it could be counterproductive. He advised postponing any rate cuts until the Federal Reserve's September meeting and highlighted the significance of the upcoming Jackson Hole symposium for Powell to regain control of the narrative.