- Federal Reserve Chairman Jerome Powell could be forced to ease interest rate hikes after recent bank runs, technical layoffs and inflation readings, CNBC’s Jim Cramer said.
- Until last week’s bank fiasco, I think [Federal Reserve Chair] Jay Powell lost the war against inflation,” said Cramer.
The collapse of multiple banks, the potential bankruptcy of start-ups and the general turmoil in the economy all suggest the Federal Reserve is on the verge of “a soft, safe landing,” CNBC’s Jim Cramer said Tuesday.
Until last week’s bank fiasco, I think [Federal Reserve Chair] Jay Powell was losing the war against inflation,” said Cramer. But the bank run that led to the bankruptcy of Silicon Valley Bank and the associated technical problems are signs that Powell is winning the battle, if not the war, he added.
Cramer acknowledged that prices for travel, housing and groceries remain high, but given the wider turmoil, “we don’t want the Fed to turn a possible soft landing into a hard one.”
Regional banks have largely recovered from concerns over the SVB’s deposit run, which Cramer said he had never experienced in his life. But it’s largely a moot point as confidence in the banking system has been eroded and consumers are exhausted.
Tech layoffs, the collapse of commercial real estate and rising credit card usage all point to the Fed, even with “a little bit of confidence,” coming close to victory, he said.
“I now believe it would be reckless for Powell to go much further than 5%,” Cramer said.
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