CNBC’s Jim Cramer on Tuesday urged Federal Reserve Chair Jerome Powell to aggressively raise interest rates to tame inflation.
“Jay Powell can’t solve the war in Ukraine. He can no longer get oil out of the ground. … Ditto for inflation, the other great source of food.” “Mad Money,” said the host.
They’re going to have to hit us with some monster rate hikes to cool things down. I expect at least $200 billion in bonds a month — double the current schedule — just a problem, he said. Not fixable,” he said.
His comments came as the Fed began its June meeting to decide on the size of the next rate hike, to be announced on Wednesday.
The Fed, which hiked interest rates by 25 basis points in March and 50 basis points in May, will also begin deconsolidating some of its balance sheet on Wednesday in a bid to pull trillions of dollars of liquidity out of the financial system.
Investors and central bank policymakers alike are poised for a 75 basis point rate hike on Wednesday. The market reacted accordingly as the S&P 500 slipped further into bear territory on Tuesday, while the Nasdaq Composite and Dow Jones Industrial Average also remained volatile.
Inflation hit new highs in May as prices rose 8.6% year-on-year, the fastest rise in four decades, also fueling the market’s recent slump.
Cramer has advocated a 100 basis point rate hike in recent weeks, urging Powell to take stronger action while arguing that the Fed is not to blame for the current state of key inflation.
“In retrospect, the Fed provided more liquidity than it needed. It should have stopped buying bonds more than a year ago. … – which isn’t much – we should stop blaming Powell for everything that’s going to happen to inflation.” said Kramer.