If midterms weren't on the horizon, the Fed would raise rates, says Wharton Professor Jeremy Siegel

Wharton School Professor Jeremy Siegel analyzes a robust yet non-inflationary jobs report, characterizing it as a supply-side success driven by labor force entry rather than excessive demand. While economic data, including a 10% annual growth in the M2 money supply since the start of the Iran conflict, suggests a need for higher interest rates, political pressure from the upcoming midterm elections and threats of increased tariffs from the White House complicate the Federal Reserve's decision-making. A potential rate hike in September might trigger an initial market dip but could ultimately bolster long-term stability by reinforcing the central bank's credibility. Upcoming PPI and CPI data will be critical in determining whether the Fed acts now or delays until December. Despite the political volatility, the underlying strength of the labor market and persistent inflationary signals provide a clear fundamental justification for tightening monetary policy.