Market rallies will be temporary until the Fed beats inflation

CNBC’s Jim Cramer on Monday warned that any market rally will be temporary until the economy cools down.

“Right now you can get a bounce. Without some more data that shows the Fed’s actually winning the war against inflation, though, rates will keep going relentlessly higher and any rally will … have a very short shelf-life,” he said.

Stocks fell on Monday ahead of the release of producer price index and consumer price index data later this week, which will shed more light on the state of inflation. The Nasdaq Composite’s losses for the year are more than 32% after Monday’s slide, while the S&P 500 is down by more than 24% so far this year.

Markets have been roiled in 2022 due to skyrocketing inflation, the Federal Reserve’s interest rate hikes, Russia’s invasion of Ukraine and recession fears. 

Yet the market still has a ways to go before it will bottom, according to Cramer. He previously said that inflation needs to ease in three key areas for the Fed to stop wreaking havoc on the market.

“Until the market’s viciously oversold, which we aren’t, and we get softer data for wages, for food and housing, you’ve got to treat all of these rallies as head-fakes,” he said.