CNBC’s Jim Cramer said on Thursday that inflation could ease soon, drawing on chart analysis by legendary technical expert Larry Williams.
“The charts, as interpreted by Larry Williams, suggest that inflation could soon come down substantially — soon — historically speaking,” he said.
The Mad Money host’s comments came after the Federal Reserve raised interest rates by another 75 basis points on Wednesday and reasserted its hawkish stance on inflation.
To explain Williams’ analysis, the Mad Money host first studied a chart of the Federal Reserve’s current fixed-price consumer price index (in black) versus the inflation spike in the late seventies and early eighties (in red).
According to Cramer, Williams notes that the current trajectory of severe price inflation is closely related to this historical pattern.
He added that, based on the inflation pattern of the late 1970s and early 1980s, current inflation is around the 1980 trajectory, around the time inflation peaked.
“Today, unlike then, the Fed knows exactly how to beat inflation, and Jay Powell has shown he’s willing to hurt. This means it should peak sooner,” Kramer said.
For a more detailed analysis, see Cramer’s full explanation below.