Cramer: I don't want a 'Fed-mandated slowdown, but we sure seem to be getting one' in the market

  • The shift at the Fed from being data-dependent to wanting to normalize rates could spell trouble for stocks, according to CNBC's Jim Cramer.
  • "I happen to like Mr. Powell very much. But I also like the stock market going higher," Cramer says.
  • There's been a debate since the 2008 financial crisis about when and how much the Fed should be taking its foot off the gas.

The shift at the Federal Reserve under Jerome Powell's leadership from being data-dependent to being blinded by the desire to normalize interest rates could spell trouble for stocks, according to CNBC's Jim Cramer.

"I happen to like Mr. Powell very much. But I also like the stock market going higher," Cramer said Monday on "Squawk on the Street." "I don't want to get a Fed-mandated slowdown, but we sure seem to be getting one."

Cramer said central bankers need to look at the economic data, which he says, show steady growth without problematic inflation. There's no reason for the Fed to raise rates more aggressively, he contended. "A real slowdown in the economy could occur here; not a recession, but a slowdown."

The "Mad Money" host expressed concerns about Powell's comments last week, in which the Fed chair said the central bank still has a ways to go yet before it gets rates to where they are neither restrictive nor accommodative.

"The Fed being lockstep instead of being data-dependent is very bad for the stock market," contended Cramer, longing for the Janet Yellen days at the Fed when data dependency was the mantra.

There's been a debate for 10 years about when and how much the Fed should be taking its foot off the gas in terms of the easy money rates that were put in place to prop up economic growth, and by extension, risk assets in the wake of the 2008 financial crisis.

With a third increase this year, the current range for the Fed's benchmark rate is 2 percent to 2.25 percent. Projections released after last month's policy meeting indicated central bankers were likely to take the funds rate to 3.4 percent before pausing. Another 0.25 percent rate rise is expected in December.

"We do not want American industry choked off, particularly at a time when we're putting through tariffs," said Cramer, whose argument echoes criticism President Donald Trump levied at Powell in a July interview on CNBC and elsewhere.

Trump told CNBC's Joe Kernen about month after the Fed's June rate hike that he is "not happy" that every time the economy shows more strength "they want to raise rates again." But in this rare White House rebuke of the Fed, Trump also said, referring to Powell, that he "put a very good man" in charge of the central bank.