Jeremy Siegel retracts his support for an emergency interest rate reduction from the Fed.

• Wharton's Jeremy Siegel no longer believes an emergency interest rate reduction is necessary, but still advocates for policymakers to act swiftly and decisively.
• "No, it wouldn't be necessary at this time," he said.

Wharton School Professor Jeremy Siegel no longer believes an emergency interest rate reduction is necessary, but advocates for quick and aggressive cuts by policymakers.

On Monday, Siegel sparked controversy when he advised CNBC that the Fed should immediately decrease interest rates by 0.75 percentage points and follow it up with another decrease in September.

The markets cratered with fears of a recession and concerns about the Fed's slow response to easing policy, but positive data and a market rally on Thursday have alleviated the urgency.

"Siegel stated during a phone interview that while he no longer believes it is necessary, he wants Powell to move down to 4% as quickly as possible. Although it wouldn't be bad, it wouldn't be necessary at this time, he added."

The Fed on July 31 decided to keep its key interest rate between 5.25%-5.5%, but this decision was criticized the next day when a report on weekly jobless claims showed a spike and a manufacturing gauge indicated the sector was further in contraction.

The service sector reading earlier in the week was better than expected, and claims moved lower from the previous week, according to data from Thursday.

"Siegel stated that he wanted to shake things up by calling for an intermeeting move. He believed that there was no way the move would occur without causing things to fall apart. Although he didn't think things were falling apart, by all criteria and monetary rules, they should be under 4%."

The Fed's market pricing suggests that it will cut interest rates by at least a quarter percentage point in September and possibly by a full point by the end of 2024. However, these expectations have been unstable as investors monitor the pace at which the Fed plans to loosen its policies.

Jay Powell's approach to emergency cuts is not typical, according to Siegel. However, Siegel believes that Powell has been too slow in his decision-making process, particularly during the upward trend. Siegel wants to ensure that Powell does not repeat the same mistakes during the downward trend.