Well-known University of Pennsylvania finance professor Jeremy Siegel believes investors’ fate lies in the hands of the Federal Reserve this year. If central bank officials “respond” to fading inflation and slowing economic growth by cutting interest rates, then stocks will soar.

“If they respond, I think there’s gonna be a really good year—15% or more total return,” Siegel told CNBC on May 10. “[But] if the Fed does not cut, then it’s going to be tougher sledding for the markets. I’m not gonna say a crash or anything in that sense, but I think it’s going to be tougher sledding.”

The Fed has raised rates from near zero in March of 2022 to 5% to 5.25% today, increasing borrowing costs across the economy in hopes of taming inflation. And so far, the bank’s officials are slowly accomplishing their goal, with some help from healing supply chains and lower commodity prices.

Year-over-year inflation, as measured by the consumer price index, dropped from its June four-decade high of 9.1% to 4.9% in April. That’s still well above the Fed’s 2% target, but Siegel argued on May 11 that the downward trajectory is enough for officials to stop their aggressive inflation-fighting campaign. The economy is already facing “some months of negative growth,” and hiring is likely to slow as the cumulative effect of the Fed’s rate hikes take hold this year, according to the professor.

A slowing economy and rising unemployment will put pressure on Jerome Powell and other Fed officials to cut rates as the year goes on, said Siegel, who is based at University of Pennsylvania’s Wharton business school. He noted that the Fed’s dual mandate requires officials to not only ensure price stability, but also maximum employment for the economy.

“Inflation has come down,” he said. “Not to 2%, but it definitely has come down. And you just have to start looking at not only that [inflation], but the employment mandate that the Fed has.”

Siegel’s latest bullish prediction reaffirms a call he made late last year that wasn’t common on Wall Street. The Wharton professor said stocks would rise 15% to 20% in 2023 due to fading inflation and Fed rate cuts in December.

“I think we should have a very good year for equities … I believe the earnings outlook for next year can remain more robust than feared,” he wrote in his weekly WisdomTree commentary, arguing that the U.S. economy would be able to weather a mild recession if it were to come as well.

On May 11, Siegel was asked if he stood by that theory after recent comments from hedge fund titan Stanley Druckenmiller, who warned of a “hard landing” during the 2023 Sohn Investment Conference on May 9.

“There’s stuff under the hood,” Druckenmiller, the billionaire founder of Duquesne Family Office, said at the conference. “It’s starting to emerge. Obviously, the regional banks, recently we had Bed Bath & Beyond, but I would assume there’s a lot more bodies coming.”

But Siegel said he isn’t as worried about potential under-the-radar economic issues as Druckenmiller. There will be further consolidation in the banking sector, and perhaps more failures of struggling businesses like Bed, Bath, & Beyond, but overall the economy remains stable.

“Even with a recession, which, if it comes, I think it’s going to be mild, I don’t see anything of a ringing out of the economy such as we had in 2008 and 2009,” he said. “Not at all.”