Market rallies will be sporadic until inflation drops

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CNBC’s Jim Cramer said Tuesday that market rallies would be short-lived as long as inflation remains persistent.

“Sometimes you don’t need to know the price of the Dow Jones, you just need to know the price of Kerrygold butter or a three-bedroom Lennar,” the ‘Mad Money’ host said.

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“If they’re down – not just from last year, but from two or three years ago – then your stocks can hold, if not go up,” he added.

Stocks fell on Tuesday as investors watched the conclusion of Wednesday’s Federal Reserve meeting when the central bank is expected to announce a 75 basis point rate hike. Traders are also watching the Fed’s projections for higher interest rates.

Fed Chairman Jerome Powell is expected to reiterate the central bank’s aggressive stance against inflation.

Cramer reminded investors that more pain is ahead and the market’s loss is Powell’s gain. Stocks represent purchasing power since investors can sell them for cash, and the Fed chief needs people to have less of that power to eradicate inflation, he explained.

In addition to driving down stock and property prices, Powell must curb wage inflation, he added.

“This is the final frontier, and the Fed will continue to put the brakes on the economy until the labor market cools down,” he said.

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