ETN’s Jim Cramer said on Thursday that inflation could fall soon, relying on chart analysis from legendary engineer Larry Williams.
“The charts, as interpreted by Larry Williams, suggest that inflation could cool off significantly soon — soon — if history is any guide,” he said.
The comments from the “Mad Money” host come after the Federal Reserve raised interest rates by another 75 basis points on Wednesday and reiterated its aggressive stance on inflation.
To explain Williams’ analysis, the host of “Mad Money” first examined a graph of the Federal Reserve’s current consumer price index (in black) compared to the inflation burst in the late 1970s and early 1970s. the eighties (in red).
Williams notes that the current trajectory of sticky price inflation closely follows this historic pattern, Cramer said.
He added that current inflation is in the inflation pattern of the late 1970s and early 1980s, about the 1980s point of the trajectory — which is about when inflation peaked then.
“Today, unlike then, the Fed knows exactly how to beat inflation, and Jay Powell has shown that he is willing to bring the pain. That means it has to peak sooner,” Cramer said.
Check out Cramer’s full explanation below for more analysis.