CNBC’s Jim Cramer said that the Federal Reserve’s quarter-percent rate hike was not the reason the market tumbled on Wednesday, rather, it was the “tone-deaf” words of Treasury Secretary Janet Yellen.
Cramer said the market “would’ve been fine” if it hadn’t been for Yellen saying that the government was not going to bail out shareholders, bondholders, or depositors in the banks that recently failed.
Many investors have been expecting the government to bail out impacted depositors and shareholders of the failed banks, according to Cramer. Yellen’s remarks to the contrary sent waves of fear through the market. he said.
Cutting through the fear, Cramer explained that the Fed’s moves today should not have been anything to worry about.
The Fed’s rate increase was “logical, reasonable and something anyone with a savings account should actually cheer,” said Cramer. Federal Reserve Chair Jerome Powell even toned down his inflation worries since, for better or worse, the bank failures will help rein in inflation, which Cramer said is good news.
But Cramer said the market struggled to see that reality because of the darker shadow of Yellen’s comments and the persistent remarks during Powell’s press conference about bank fragility.
“We believed things were stabilizing. But now, thanks to the congressional hectoring of Janet Yellen and the endless replay of questions to Powell about the fragility of the banking system, we came out of the session worried,” said Cramer.
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