The U.S. Federal Reserve has implemented 11 interest rate hikes in the last 18 months. While the Fed decided to leave its benchmark interest rates unchanged at its latest meeting, CNBC's Jim Cramer does not believe that the central bank is done with hawkish moves.
"Labor's still tight, housing's tight, mortgage rates are high ... they've doubled and it hasn't affected housing at all. We have 3.8% unemployment, inflation rate close to 4% — the Fed's targeting 2%," Cramer said during Wednesday's "Mad Money" segment.
"They've already tightened so much without seriously damaging the economy, what's another 50 basis points?"
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Cramer explained that while Fed Chair Jerome Powell would like to bring price levels down without negatively impacting the labor market, it doesn't mean he'll be lenient in combating inflation.
"Here's what Powell wants: He would love to see prices come down without lots of layoffs. But if they don't, he'll raise rates until the prices come down, even if there are a lot of layoffs," he said. "He's willing to inflict that pain because he knows that long term, the damage done by inflation is far worse than anything else that could happen right now."
According to the dot plot projections accompanying the Fed's latest interest rate announcement, 12 of 19 officials at the Fed see one more rate hike this year,
When asked in the news conference whether interest rates have reached sufficiently restrictive levels, Powell replied that the Fed would like to see more progress in curbing inflation.
"We want to see convincing evidence, really, that we have reached the appropriate level, and we're seeing progress, and we welcome that," he said. "But we need to see more progress before we'll be willing to reach that conclusion."
Fed Chair Is Winning
Cramer appreciates what the central bank chief has already accomplished.
"JPOW's done a good job getting inflation down from the highs — I'm proud of him," he said Wednesday.
In August, the U.S. consumer price index rose by 3.7% from a year ago. While the prices of many necessities like food and shelter remain elevated, this headline inflation rate has come down a lot from its 40-year high of 9.1% last June.
Cramer believes Powell is one of the reasons the stock market has the potential for another upward move.
"Powell is winning in so many places, from homes to job openings to starting salaries," Cramer said in a recent post on X, formerly Twitter. "That's one of the reasons this market can go higher so easily."
Stocks have already shown gains in 2023, with the S&P 500 climbing 13%.
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