• Jeremy Siegel said there was "no question" the US was already in a recession, even if it hasn't been called yet.
  • It's possible the Fed doesn't need to hike up interest rates as much as anticipated to fight inflation. 
  • "The Fed has to be careful not to slam on the brakes and just crash this economy," Siegel said.

The US is already in a recession and there's a possibility that the Federal Reserve won't have to hike interest rates as much as markets have anticipated if data continues to weaken, Wharton Professor Jeremy Siegel said. 

Siegel predicted that second-quarter GDP growth would be negative for the second straight quarter, meeting the technical definition of a recession.  

"We are really in a recession. There's no question," Siegel said in an interview with CNBC on Wednesday

His comments come ahead of the Fed's release of the minutes from its June meeting at 2 p.m. ET. Loretta Mester, the Federal Reserve Bank of Cleveland President, told CNBC last week that she would be pushing for a 75-point rate hike at the upcoming meeting at the end of this month. It would be another episode of dramatic interest rate increases as the Fed scrambles to tame prices.

But Siegel is skeptical that such a move will even be necessary. Inflation is hot, he admits, with the May Consumer Price Index clocking in at 8.6%, the fastest rise since 1981. The S&P 500 also just finished its worst half of the year since 1970, cutting deep into investors' earnings.

But it's possible that a 75 basis point hike would be "excessive" given softening economic conditions, and observers are overestimating how tight policy really needs to get in order to fight inflation. 

Siegel points out that there are already signs inflation has peaked and the Fed may be going too far in its hawkish pivot. Certain segments like commodity and housing prices have peaked, although wages continue to rise. Money supply has grown stagnant, which is another indicator that inflation is no longer accelerating. 

"The Fed has to be careful not to slam on the brakes and just crash this economy," Siegel said. "They have to realize most of the inflation now is behind us, even though it's going to go through the official statistics for the next six to 12 months."

Siegel said that if high level economic data points weaken ahead of the next Fed meeting, it is possible that a much lower rate hike is delivered by the central bank, even as low as 25 basis points versus the 75 basis points markets are expecting. 

"Yes, the Fed has to do some more tightening, but may they don't have to go to that 3.75% the funds rate is projecting," he said.

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