Jim Cramer says Wednesday’s market rally was ‘based on a dream’

CNBC’s Jim Cramer said that Wednesday’s rally will likely reverse course as soon as a Federal Reserve official reminds Wall Street of its hawkish stance against inflation.

“The moment some Fed-head explains the obvious, today’s gains will indeed disappear because they’re incompatible with the Fed’s attempts to control inflation. This rally was based on a dream,” he said.

Stocks rose on Wednesday as the Bank of England said it will buy back bonds to stabilize the currency market, a day after the S&P 500 notched a new bear market low.

The two-year Treasury also fell from around a 4.3% yield to 4.1% in what Cramer called a “stunning” reversal.

“It was like the entire bear market transformed into a bull market because another country’s central bank — not our central bank — gave up on fighting inflation,” he said.

And while the Bank of England seems to have at least temporarily abandoned its efforts to tighten the economy, Cramer warned that the Fed is unlikely to do the same, especially since it wants prices and people’s spending power to come down.

“In the next two days, we’re going to hear, likely, from a bunch of Fed officials who’ll deny that they’re going to blink and insist they have the fortitude to fight inflation,” he said.