Powell’s ‘been dealt an insanely bad hand’ in inflation fight

CNBC’s Jim Cramer defended Federal Reserve Chair Jerome Powell Monday after the central bank chief promised aggressive action on inflation.

“Powell’s been dealt an insanely bad hand. So of course he’s fallen behind. Hence why he’s said that the Fed will move with alacrity from here on out,” the “Mad Money” host said. “So feel free to blame him for not seeing what was coming. If he has to do a [50 basis point interest rate hike], he will.”

“Never forget that Powell’s been asked to do the impossible here: Figure out how fast to raise interest rates when so many things should be slowing the economy and cooling inflation naturally, yet nothing has worked out the way we expected,” he added.

Powell on Monday pledged that the Fed will take strong action against surging inflation, which is currently at its highest level in 40 years. Powell said rate hikes bigger than a quarter-percentage point are possible and hikes will continue until inflation is under control.

His strong stance against inflation, which comes one week after the Fed raised interest rates for the first time in more than three years, led the market to teeter Monday, ending a multiday streak of gains. The Dow Jones Industrial Average dipped 0.6%, while the S&P 500 slipped 0.04%. The Nasdaq Composite dropped 0.4%.

Listing a bevy of recent market shakers — including the current housing shortage, the semiconductor chip shortage, healthy consumer spending, Covid fears and Russia’s invasion of Ukraine — Cramer reiterated that these unprecedented times have made it difficult for Powell to anticipate what will strike the market next.

Cramer added that he believes it’s unfair for investors to expect Powell to predict the path of the pandemic.

“At the end of the day, public health is outside of the Fed’s purview,” Cramer said.