Jim Cramer Warns: Oil Price Surge Puts Fed in Tight Spot
According to Jim Cramer, the recent surge in crude oil prices has the potential to trigger a substantial wave of inflationary pressure across the entire U.S. economy.
Cramer expressed his views on this matter in a recent Mad Money episode, where he speculated that Federal Reserve Chair Jerome Powell might opt for another interest rate increase during this week. Such a move, Cramer believes, could exert significant stress on high-risk assets.
Although the prevailing expectation is that the Federal Reserve will announce a pause in increasing the Fed Funds rate, currently at 5.50%, this Thursday, Cramer suggests that another rate hike appears more probable. This assertion is primarily based on the escalating oil prices, which have surged from $69 to over $90 since June.
Cramer emphasized Powell’s heightened concern for curbing inflation, potentially overshadowing considerations related to preserving corporate earnings, employment, or consumer spending. This concern becomes more challenging to address as oil prices continue their ascent.
With crude oil prices hovering around $90, and the possibility of reaching $100, there is a growing risk that the elevated fuel costs could become deeply ingrained in the entire economic system. While it remains uncertain whether these developments will directly influence the Federal Reserve’s actions, they undoubtedly provide Powell with more reasons to maintain a hawkish stance in his official statements and ensuing Q&A sessions.
READ MORE: Fed’s Meeting: What to Expect for Markets
Furthermore, Jim Cramer has also highlighted the potential for market “turbulence” in the event of an unexpected rate hike announcement by the Federal Reserve this week.
In summary, Jim Cramer’s analysis suggests that the recent surge in oil prices may lead to increased inflationary pressures, potentially influencing the Federal Reserve’s decision to raise interest rates. This situation could introduce market uncertainty and “turbulence” in the near term.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
