Cramer warns central bankers to stop 'Fed-mandated slowdown' before they kill the stock market

  • "What the bulls need right now more than anything else is for the Federal Reserve to be proven wrong," CNBC Jim Cramer says.
  • Cramer has been railing against what he calls "the Fed-mandated slowdown" since last week's market meltdown.
  • Fed Chairman Jerome Powell needs to recognize the signals of a slowing economy and stop raising interest rates, Cramer says.

Federal Reserve Chairman Jerome Powell holds the fate of the stock market in his hands, according to CNBC's Jim Cramer.

"What the bulls need right now more than anything else is for the Federal Reserve to be proven wrong," Cramer said Monday evening on "Mad Money" after stocks continued last week's decline and before the rally at Tuesday's open.

Cramer has been railing against what he calls "the Fed-mandated slowdown" since last week's market meltdown, arguing Powell needs to recognize the signals of a slowing economy and stop raising interest rates.

Growth may look strong now, with inflation creeping up, but it won't remain that way in 2019, Cramer said. "The bull thesis is very simple. You have to bet the Fed tightens in December and then says, 'You know what? We may be winning the battle against inflation. So let's wait and see what happens rather than committing to three more rate hikes [next year].'"

"If they do that, you know what's going to happen? We are going to get a huge rally into the end of the year," predicted Cramer, while also warning that the Fed does not have a good track record of making the right moves in the face of slowing growth.

Cramer referenced his 2007 "They know nothing" Fed rant, in which he warned central bank officials that they were ignoring signs of the impending financial crisis.

Stressing the "current situation is nothing like 2007 where we just had gigantic systemic risk," Cramer said Monday, "I think we're looking at a small Fed-mandated slowdown, not a total financial meltdown."

"But it sure feels like the Fed is making the exact same mistakes, doesn't it?" he asked, rhetorically, referring to what he believes is the current Fed's failure to take off its blinders.

Cramer implored Powell to listen to the buzz on trading floors and from Wall Street research firms about being "late in the cycle," explaining that's code for "'it's about as good as it gets;' we're decelerating, may be quickly."

On Monday's show, Cramer reiterated that Powell needs to change course and make monetary policy data-dependent again, rather than sticking with his comments early this month that rates are a "long way" from neutral.

Those remarks, coupled with projections after the September Fed meeting, about an aggressive path higher for rates next year, put pressure on stocks that resulted in last week's 4 percent plunge.

The Fed has hiked rates three times this year, with another one expected in December.

WATCH: This strategist expects a December rate hike by the Fed