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Federal Reserve Chairman Jerome Powell is set to underscore the independence of this institution during his testimony before Congress this week, CNBC's Jim Cramer said on Monday.
"At one point he must reaffirm the independence of the Fed and that he will not do what the President tells him to do," Cramer said in "Squawk on the Street". "He must defend the institution."
President Donald Trump told reporters Sunday that the Dow Jones Industrial Average would be "5,000 to 10,000 points higher" without the Fed's restrictive policies. The Dow was under pressure Monday after losing ground Friday. The Dow closed at a record 26 966 during Wednesday's short trading session before the July 4th holiday.
Trump has repeatedly criticized Powell for the Fed 's decision to raise interest rates four times last year and maintain them until now this year. Earlier this year, the White House reportedly turned down Powell's demotion.
On Friday, Trump tweeted that the Fed was the "most difficult problem" that the US was facing, saying it "increased rates too early, too often, and tightened, while others were doing exactly the opposite.
"I think it's increasingly difficult for the Fed chief to ignore the critics," said the host of "Mad Money." Until now, Powell, who was appointed by Trump, responded to the criticism by maintaining the Fed's independence and saying that it intended to fulfill its mandate of four years. But this position will only take him that far, because the rhetoric becomes "too intense," Cramer said.
Powell will testify before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday. At these meetings, he will likely be asked if he will lower interest rates on the Trump order, Cramer predicted. "He can not just say," I'm ignoring the president, "said Cramer, but must say that it's not his job to" drive up the Dow ".
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