Why Jim Cramer wants the Fed to hike rates much more aggressively

Published Fri, May 20 202211:23 AM EDT

Jim Cramer has a message for Federal Reserve Chairman Jerome Powell : Do whatever it takes to break soaring inflation and do it now. Cramer said Friday morning that central bankers need to hike interest rates much more aggressively to arrest spiking prices in "every aisle" of every store. "Crushing inflation" cannot happen with 50 basis point rate increases, Cramer told CNBC, reiterating his call Thursday on "Mad Money" for 75 basis point or even 100 basis point moves. One hundred basis points is equal to 1%. Powell has thus far been taking a more gradual approach to tightening monetary policy to wind down the extraordinary measures put in place in March 2020, when the Covid-19 pandemic closed economies around the world. The Fed raised rates by 25 basis points in March, the first hike in more than three years. In May, rates were increased by 50 basis points, in the most aggressive hike in more than 20 years. Cramer, who's been a supporter of Powell, said the Fed chief made a grave mistake when earlier this month he took a 75-basis-point hike off of the table for upcoming meetings. "He lost his leverage," Cramer said. Powell later clarified and walked back that comment. But Cramer said the damage had already been done. Had the Fed been more aggressive in May and left everything on the table, the stock market wouldn't have tanked, Cramer argued. "I think the market would be higher." "We're going to have to go 100 basis points" at the Fed's June meeting and stay aggressive for the rest of the year to halt the "runaway train of inflation," Cramer said Friday. The market expects rate increases at all of this year's remaining Fed policy meetings. "I was shocked" by how two of the biggest and best American retailers, Club name Walmart (WMT) and Target , dealt so poorly with inflation on their latest fiscal quarters, Cramer said, adding those surprises should be a wake-up call to Powell and company at the Fed. "We got to break this," Cramer said. "We need to break it now." (Jim Cramer's Charitable Trust is long WMT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

U.S. Federal Reserve Chair Jerome Powell discusses interest rate hikes at press conference in Washington, D.C., on May 4, 2022.

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