- Fed Chairman Jerome Powell needs to recognize the economy is not strong enough for lots of interest rate hikes next year, CNBC’s Jim Cramer says.
- Powell must “stay a little more focused on what’s not working,” Cramer says, but predicts the Fed will hike rates next week.
CNBC’s Jim Cramer said Friday that Federal Reserve Chairman Jerome Powell needs to completely get on board with the idea that the economy is not strong enough to withstand an aggressive path higher for interest rates next year.
“He’s got to repudiate his 2019 forecast. He must repudiate it or this market will go down even more,” Cramer said on “Squawk on the Street.”
But Powell and the central bank next week, at their final monetary policy meeting of the year, has to hike rates for a fourth time in 2018, said Cramer, adding, “it would really scare people if he didn’t put the hike through because he’s been talking about it.”
Thursday evening on his “Mad Money” show, Cramer said, “There’s enough conflicting evidence that the economy is slowing, perhaps even dramatically, that I think the Fed should wait and see before taking any additional action” after its December move.
On Nov. 28, Powell said rates were a “just below” neutral, walking back his stock market-slamming Oct. 3 remarks that rates were a “long way” from neutral, a level seen as neither stimulative nor restrictive to the economy.
Right after last month’s speech, Cramer said Powell blinked, describing the new stance as a “very big change in view.
But on Friday, Cramer characterized Powell’s just-below comments as an “alleged walk back,” suggesting he still wants to see the Fed chief make an even stronger statement that rates won’t be soaring in 2019.
“I think he’s under the impression that things are really humming because he’s looking at the big macro retail numbers,” Cramer said. “But he’s got to stay a little more focused on what’s not working.”
After its latest rate hike in September, central bankers projected three moves next year. The Fed will deliver next week an updated rate path. The market expects the rate path to be scaled back.