"The Fed is basically going to be on hold going forward. We're not going to see those hikes unless things really normalize," the Wharton School finance professor said at the ETF.com Inside ETFs conference in Hollywood, Florida.
Read MoreThis is when Wall Street sees the next rate hike
Expectations for rate increases have already diminished ahead of the outcome of the Fed policymaking committee's next two-day meeting, which started Tuesday. Markets are pricing only a 13 percent chance of a hike this week and a 33 percent probability at the Fed's March meeting, according to the CME Group's FedWatch tool.
The S&P 500 has fallen more than 7 percent this year amid an 18 percent plunge in U.S. oil prices. The Fed cited global market volatility in its decision not to raise rates last September, and will likely do so again this year, Siegel said.
Top Fed officials have repeatedly highlighted low inflation, which continues to lag below the central bank's 2 percent target. A more than 40 percent drop in the price of U.S. oil has contributed to that sluggishness.
"It is the deflationary wave that is the major source of problems," Siegel said.