The Fed Can’t Stop Raising Interest Rates Because of These 4 Factors

CNBC’s Jim Cramer listed four reasons why the Federal Reserve can’t stop tightening the economy just yet.

  1. Not enough people are re-entering the labor market. This makes it harder for the Fed to eradicate wage inflation.
  2. There is a gap between job offers and job seekers. While many engineers are needed to implement the measures of the bipartisan Infrastructure Bill and the Cut Inflation Act, “we are short of engineers,” he said.
  3. There are too many people working in customer relationship management, data analysis and advertising. The abundance of these workers means the enterprise software industry is “bloated” and more layoffs are likely.
  4. Too many new businesses have been created in the past two years. It has driven up wages and it will take time for all the capital to go down as they struggle to stay in business, he said.

“This market is hostage to the Federal Reserve, and the Fed won’t stop tightening until it sees more evidence of real economic pain. Unfortunately, we’re not there yet.” , did he declare.

Major indexes rose broadly last week after Fed Chairman Jerome Powell signaled the central bank may slow its pace of increases in December, although a strong jobs report on Friday disrupted the outlook. rise in stocks. Shares fell on Monday as investors feared policymakers could push the economy into a recession.

Cramer attributed market volatility to the difficulty of predicting how the central bank will continue its fight against inflation.

“Staging the Fed’s next move is more art than science,” he said, adding, “You have to figure out when people will start coming back into the workforce and when companies that are losing money will let their employees go or simply go bankrupt.”

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