Cramer says to give Powell ‘benefit of the doubt’ on inflation

CNBC’s Jim Cramer on Wednesday expressed support for Federal Reserve Chairman Jerome Powell’s patient approach to monetary policy.

Critics believe Powell should act to control inflation, but the host of “Mad Money” said the central bank chief was right to keep politics easy for now.

“I say give Jay Powell the benefit of the doubt. He’s been right as the rain since the start of the pandemic. His critics have been wrong for ages,” Cramer said.

Cramer highlighted the increase in Covid cases across the country as the highly transmissible delta variant spreads.

“Powell insisted that we have to wait and see what happens with the delta variant before we start increasing rates or even decreasing,” Cramer said.

Earlier Wednesday, Southwest Airlines warned the Delta variant was hurting bookings and lowered its revenue and profit forecast. “Southwest’s advance announcement is a shocking reminder that much of the turning point in our economy has to do with outings, travel. Ticket prices must come down if the new epidemic causes more people to stay at home,” Cramer said.

The host of “Mad Money” also looked at the latest consumer price index for signs that the price increase may be transient.

Core inflation, which excludes energy and food, rose 0.3% last month, below economists’ 0.4% increase and well below 0% increase , 9% of June. The Consumer Price Index report also showed that used car inflation slowed in July.

“We don’t know if there is less demand or more supply from new car manufacturers. Either way, used car prices are a formidable barometer for the future. auto industry, and right now they’re saying things are calming down, ”Cramer says.

Cramer also believes it would be a mistake for the central bank to raise rates as the labor market recovers and businesses return to normal. Companies like Wendy’s and Uber have said job applications are rebounding in states where unemployment benefits have been suspended.

“Can you imagine the economic catastrophe if the Fed were to put the brakes on the economy just as those benefits dwindle everywhere in late summer and millions of people return to the workforce? It could get very ugly.” , he added. noted.