December 8, 2022

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Inflation may have just peaked

Inflation may have just peaked

CNBC’s Jim Kramer said Tuesday in the wake of another Hot Price Index report that US inflation may not be able to pick up in the current economic cycle.

Kramer said, referring to St. Louis Federal Reserve Chairman James Bullard Central bankers urged To “front load” raise interest rates to fight rising inflation.

“But I also think when you see that kind of number, you have to wonder how sustainable it is. I mean, it’s like, everything is red hot,”mad money“Added the host.” It is not sustainable. It’s too high.”

Producer Price Index, which measures wholesale inflation, Increased 1% in January. This is double the Dow Jones estimate. Prices are up 9.7% from a year ago, just under the biggest jump ever. The latest PPI came days after the January Consumer Price Index – which measures retail inflation – was shown. 7.5% annual increase, More mounting pressure on the Federal Reserve to take action to calm things down.

“We’re in a market where it’s all the Fed and Putin. Powell and Putin and Powell and Putin,” Cramer said, noting that investors might take a bit of relief if inflation is really peaking and Russia is already working to ease the Ukraine crisis.

Regardless of rates, the Fed has been working to end its massive Covid-era bond-buying program, which was put in place nearly two years ago to support the pandemic-stricken economy. Once the asset purchases are finished, sometime in March at the current pace, the Fed has to figure out when to start reducing its balance sheet — in other words, when to start allowing fixed-income assets to mature without reinvesting them.

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Some people worry that bond buying won’t be completed before the Federal Reserve’s mid-March meeting, when the first of what the market sees as seven rate hikes this year is widely expected.

Kramer said the Fed should not just end bond buying, it should actually sell assets. Now, I mean, Jay Powell says, ‘Oh, Sheesh, man, he’s not going my way. It’s not like that,” Kramer said of Federal Reserve Chairman Jerome Powell. And he has to sell bonds.” He added that while Powell may be a near-term cash target, inflation is likely to fall enough to ease concerns.

“I think he’s looking at that number and he should be thinking, ‘I don’t think this number is sustainable,'” said Cramer, who has been supportive of Powell and his handling of monetary policy during Covid. Horrible, people will say, ‘I think this was for inflation.

Kramer made these comments on CNBC Tuesday “croak box” And “whoop in the street”. open an account now For CNBC Investment Club to keep track of Kramer’s every move in the market.