CNBC’s Jim Cramer said Thursday that inflation could drop soon, relying on chart analysis from legendary technician Larry Williams.
“The graphs, as interpreted by Larry Williams, indicate that inflation could calm down significantly soon – very soon – if history is any evidence,” he said.
The “money madThe host country’s comments come after the US Federal Reserve on Wednesday raised interest rates by another 75 basis points and reiterated its tough stance against inflation.
To explain Williams’ analysis, “money madThe host first examined the graph of the Fed’s current flat CPI (in black) compared to the burst of inflation in the late 1970s and early 1980s (in red).
Williams noted that the current trajectory of steady price inflation has closely embraced this historical pattern, Cramer said.
He added that when it falls into the inflation pattern of the late 1970s and early 1980s, current inflation is roughly at the 1980 point of the trajectory — close to when inflation peaked at that time.
“Today, unlike back then, the Fed knows exactly how to beat inflation – and Jay Powell has shown it’s ready to cause pain. That means it should peak sooner,” Cramer said.
For more analysis, see Kramer’s full explanation below.