Jim Cramer says this ‘trifecta’ needs to see dampening inflation for the Fed to stop raising rates

CNBC’s Jim Cramer on Thursday said that there are three crucial areas where inflation needs to come down for the Federal Reserve to stop inflicting pain on the stock market.

“They’re beating inflation in so many places. Unfortunately, they’re not winning on food, they’re not winning on housing, and they’re not winning on wages and they need to hit that trifecta before this will end,” he said.

Persistent inflation this year driven by Russia’s invasion of Ukraine, Covid shutdowns and worker shortages has pushed up prices for everything from gas at the pump to food at the grocery store. The food index has climbed 11.4% over the last year. Home prices in July remained up year-over-year, even as its upward pace cooled. 

At the same time, companies have raised worker wages, sometimes by a significant amount, to account for the impact of inflation on their employees. Jobless claims fell last week to their lowest level in months, indicating the labor market is still strong.

“The good news? The Fed wants to get this done real fast and real quick and I think they will,” Cramer said.

He added that while the stock market will continue to experience pain, it shouldn’t scare investors away from making carefully selected purchases.

“We’ve got so many stocks of companies with healthy balance sheets and good dividends, and you have my blessing to buy them,” he said.