CNBC’s Jim Cramer Says Brace for Turbulence, Warns Inflation Could Mount Comeback Amid Sky-High Crude Oil Prices

CNBC's Jim Cramer Sounds Alarm About Potential Inflation Surge in the US Economy Due to Soaring Crude Oil Prices

In a recent episode of Mad Money, Jim Cramer speculates that Federal Reserve Chair Jerome Powell might opt to increase interest rates once more this week, potentially exerting pressure on risk assets.

While there is an expectation that the Fed will announce a pause in raising the Fed Funds rate at 5.50% during the upcoming Thursday meeting, Cramer believes that another rate hike is a more likely scenario. He points to the surging price of oil, which has climbed from $69 to over $90 since June, as a significant factor in this potential decision.

Cramer explains, "Powell appears to be more concerned about combatting inflation than preserving earnings, jobs, corporate balance sheets, or consumer spending. He faces the challenge of arguing that inflation is still on a downward trend—a position that becomes increasingly challenging as oil prices continue to rise."

The cost of crude oil has crept up to $90, and there are indications it could reach $100, a level at which elevated fuel costs may become entrenched in the overall economic system. Cramer acknowledges uncertainty about whether this will prompt a change in the Fed's actions but suggests it could influence Powell's rhetoric. This would provide further justification for Powell to maintain a hawkish stance in his statement and subsequent Q&A session.

Cramer warns of potential "turbulence" in the markets this week if the Fed announces an unexpected rate hike, stating, "The key takeaway here is that when there's an upcoming Fed meeting, and the general sentiment appears complacent, it might be wise to prepare for some market instability."

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Sep 18, 2023