Wharton professor Jeremy Siegel predicts the Fed will end its interest-rate hikes this month - and stocks will surge 15% next year

• The inflation threat is receding despite some data saying otherwise, Jeremy Siegel says.
• The Wharton professor expects the Federal Reserve to end its interest-rate hikes after this month.
• Stocks could surge 15% next year after the Fed realizes it's won the inflation war, Siegel said.

The Federal Reserve has beaten back inflation and will end its interest-rate hikes after this month, sending US stocks up as much as 15% next year, Jeremy Siegel has said.

Official US price data this week showed a 0.2% month-on-month rise in core inflation in November, driven by a 0.6% increase in shelter-cost inflation. Siegel, a finance professor at the Wharton School, dismissed the faster pace of housing price increases as "nonsensical" and "bogus" as it's based on lagging data.

"It's negative now, it will be negative next month, and it's actually been negative for the last two months," Siegel said about core inflation, which excludes volatile food and energy prices, in a CNBC interview on Tuesday.

"Inflation is, as I said a month ago, over," he continued, adding that he believes the Fed may have already tightened its monetary policy too much.

Headline inflation has soared to 40-year highs this year, spurring the Fed to hike rates from near zero in March to around 4% today and pencil in further increases, including an expected 50-basis-point hike this month. Higher rates deter spending, hiring, and investing, which helps to cool the economy and curb the rate of price increases.

Siegel predicted a raft of new data early next year will lead the Fed to end its rate hikes, and shift its focus to the question of when to lower rates. The US central bank may start cutting rates by the middle of next year, he told Wharton Business Daily on Monday.

Siegel told CNBC that markets are worried about the prospect of an imminent rate hike, a hawkish outlook, and an ominous tone at the Fed's meeting week, as well as a looming recession. But he added that the current pessimism could present an attractive opening to bold buyers.

"I've never seen so much bearishness," Siegel said. "That excess of bearishness to me means this a good opportunity for investors."

"The market is undervalued," he continued. "When the Fed gets it, and they will get it next year, I think we've got a good 10%, 15% rally going for the stock market."