- CNBC's Jim Cramer on Thursday said the Federal Reserve no longer needs to take action to tame inflation.
- Investors were expecting a possible 50-basis-point interest rate hike from the Federal Reserve next week based on comments from Chairman Jerome Powell.
- But expectations have shifted quickly after the collapse of Silicon Valley Bank and the growing banking crisis.
CNBC's Jim Cramer on Thursday said the Federal Reserve no longer needs action to tame inflation — and it's because of the banking crisis.
Cramer said 10 days ago that investors were expecting a possible 50-basis-point interest rate hike from the Fed based on Chairman Jerome Powell's recent response to January inflation data and the strong labor market.
Powell warned that if inflation remained strong, he expected rates to go "higher than previously anticipated" and possibly faster than a quarter point at a time.
It seemed like a 50 basis point rate hike was coming until the collapse of Silicon Valley Bank, Cramer said.
Following the Silicon Valley Bank implosion, regulators shut down Signature Bank in New York, and global bank Credit Suisse and First Republic Bank in California both announced liquidity issues.
"We thought Powell was going to hit us with a 50-basis-point hike because inflation refused to be beaten," Cramer said. "Now we know he doesn't need to do anything to beat inflation — those bank runs will do it for him."
Stocks rose on Thursday after the news that a group of financial institutions would rescue First Republic by depositing $30 billion, and that Credit Suisse would borrow up to nearly $54 billion from the Swiss National Bank.
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