'We Have To Stop Dreading Every Powell Speech,' Warns Jim Cramer. Here's What He Says Really Matters

“Mad Money” host Jim Cramer believes we’re making the same mistake every time Jerome Powell speaks: we're overthinking it. Cramer says, “We are in a FED cutting cycle.” The Federal Reserve has shifted from raising interest rates to lowering them. That’s the main thing to focus on, not whether the cuts are coming fast or slow.

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The Fed is cutting rates to help stimulate the economy. While there's always uncertainty about the pace of these cuts, Cramer thinks investors are getting too worked up. In his view, it's more important that rates are being reduced than worrying about exactly how much or when. This means better borrowing conditions are ahead for businesses and consumers – typically good for stocks and the broader economy.

The Bigger Picture

In recent weeks, Powell has clarified that while inflation is improving, it's not completely under control. Although October’s inflation figures were slightly higher than September’s, they were still within the forecast range. Powell has stressed caution regarding rate decreases, as have other influential figures such as Minneapolis Fed President Neel Kashkari. They want to ensure inflation is truly back on track before getting too aggressive with reducing rates.

Kashkari admitted that he's been surprised by the resilience of the U.S. economy despite higher interest rates. However, he also pointed out that the labor market has softened, which might give the Fed more room to start easing. Meanwhile, Boston Fed President Susan Collins has said she's waiting on more data before deciding on rate cuts and some investors are scaling back their expectations for a big move in December.

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Cramer's point is simple: rate cuts are coming, even if they're coming slowly. Despite all the cautious talk, Joe Brusuelas, chief economist at RSM, thinks a 25 basis point cut in December is still likely. That would bring rates down to somewhere between 4.25% and 4.5%, which is still high but moving in the right direction for growth. Like many other analysts, Brusuelas thinks the Fed will act cautiously, particularly in light of uncertainty surrounding fiscal policies.

Trump's proposed policies – including tariffs and a stricter stance on immigration – were previously noted as complicating factors in managing inflation. However, Powell has emphasized that the economy is in a strong position right now. With unemployment at 4.1% and consumer spending solid, the Fed isn't in any rush to push rates lower unless something drastically changes.

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