- Federal Reserve Chairman Jerome Powell is at a critical juncture that will determine the trajectory of the U.S. economy, CNBC's Jim Cramer says.
- After December's widely anticipated interest rate hike, Powell's moves will set the course for 2019, the "Mad Money" host says.
With a month left until the Federal Reserve's next widely expected interest rate hike, Fed Chair Jerome Powell is facing a critical juncture that could determine the trajectory of the U.S. economy, CNBC's Jim Cramer said Thursday.
After hearing Powell's remarks in a Wednesday interview with Dallas Fed President Robert Kaplan, Cramer felt that for the first time, Powell was growing cautious about the pace at which the Fed is raising rates. The central bank has said it plans to raise rates once more in December and three times in 2019.
In a question-and-answer session during the interview in Dallas, Powell acknowledged that the pace of global economic growth was slowing, but said it was "not a terrible slowdown." Earlier this year, Powell said the Fed was "a long way" from neutral interest rates, signaling more hikes to come.
"Kaplan's questions allowed Powell to walk back his sadly intemperate comments from October, comments that seemed to be almost blithely oblivious to some of the more worrisome data out there," Cramer reflected on "Mad Money." "After all, there are degrees of slowdowns that, nonetheless, can cause an awful lot of havoc and cost a lot of jobs, and that's what we're on the verge of here."
And after last night, it became clear that "Powell gets it, too," Cramer said. The central bank chief is realizing that "there's another side" to the U.S. economy that is splintering under the dual pressures of higher rates and higher tariffs, he said.
"Is it too late? Yes, if we get four more hikes. Absolutely. No if we only get one and we wait," the "Mad Money" host said. "Powell knows now that normalizing interest rates isn't the goal — no one knows what normal is these days anyway."
Instead, Powell has realized his job is to taper the "end-of-cycle talk" that has been filtering through the stock market and the broader economy and that many see as being tied to his rate hikes and the president's tariffs, Cramer said.
"We know Powell's now concerned that we actually could be at the end of the economic expansion. That's a soft reversal of his earlier position from just one month ago, when he was so wedded to the explosive-growth conceit that he talked about overshooting with rate hikes to stamp out inflation," the "Mad Money" host said. "The guy's clearly paying attention to the data now. You know what? That's all you can ask for."