Crypto and high wages must crash for the Fed to beat inflation

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CNBC’s Jim Cramer outlined on Tuesday what needs to happen for the Federal Reserve to finally beat inflation after the monthly Consumer Price Index report showed prices rose less than expected in November.

“Without a well-deserved crypto crash and a sign of higher unemployment recognized by [Federal Reserve Chair] Jay Powell, this CPI reading should be treated as a single number,” he said.

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Cramer said while the CPI data is a good sign for the Fed, the central bank needs to rein in inflation in several areas of the economy, especially in wages. That means there must be a lot more wrecks in the job market, which remains to be seen, he added.

Another hurdle for the Fed is that speculative assets have managed to stay afloat, according to Cramer. Bitcoin hit its highest level in more than a month on Tuesday after the CPI reading was colder than expected despite the spectacle of crypto exchange FTX collapsing.

The Securities and Exchange Commission on Tuesday charged former CEO Sam Bankman-Fried with embezzlement.

“Today should have been a huge win for Jay Powell on the speculation front, as part of the fight against inflation is draining speculative juices from the economy. Yet there is still a ton of juice to drain crypto,” Cramer said.

High wages and the resilience of the crypto suggest the Fed still has a long way to go, he concluded.

“The Fed has to start somewhere in the fight against inflation and today is a good start, but [Powell’s] crush inflation for good,” he said.

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