• Wharton’s Jeremy Siegel said the Fed could pause its interest rate-cutting cycle next week.
• He said a strong jobs report for October would prompt officials to doubt the need for more cuts.
• Interest rates will likely remain elevated in the long-term, he added.

The Fed could surprise markets by leaving interest rates unchanged at its meeting next week, top economist Jeremy Siegel said.

The Wharton finance professor said that though investors are pricing in another 25 basis-point rate cut in November with near certainty, a hot jobs report on Friday could upend those expectations.

Economists expect data to show 110,000 jobs were added in October. A big upside surprise to that estimate would follow September’s stunningly strong reading of 254,000, and would likely further recalibrate the market’s expectations of how much the Fed will ease interest rates.

“If we get a strong labor market report for the month of October, there’s going to be a lot of people, a lot of the FOMC members, that are going to say maybe we should pause at this particular juncture,” Siegel said in an interview with CNBC on Friday.

Fed officials issued a jumbo-sized, 50 basis-point rate cut at their September meeting. Fed governor Michelle Bowman was a lone dissenting voice at that time. Since then, and since the big September jobs figure, other Fed officials have called for more “caution,” pointing to the resilient job market and strong economic growth.

Siegel predicted central bankers would cut rates another three to four times in their policy-easing cycle. However, he said, interest rates will probably be elevated in the long run. He added that the stock market looked “strong” and that the economy remained resilient.

Third-quarter GDP data will be published on Wednesday, and is estimated to show the economy grew by 3.3% from July through September.

Most investors are still expecting steady rate cuts over the coming months despite the strong economic backdrop. According to the CME FedWatch Tool, markets see two 25-basis point cuts through the rest of this year and see about a 40% chance that the Fed funds rate will be 100 basis points lower by May of next year.