Cramer says the market may be expecting too many Fed rate hikes this year

CNBC’s Jim Cramer said Monday that investors should not bet against Federal Reserve Chairman Jerome Powell and his approach to fighting inflation.

“I just think that everyone has decided that inflation is going to last years, and without multiple [interest rate] increases, Jay is going to be very wrong,” Cramer said on “Squawk Box.”

“I just think Jay’s looking at the future” in a deliberate fashion, and he’s not getting ahead of the data, said Cramer, who has praised Powell’s handling of monetary policy during the Covid-19 pandemic.

Cramer’s comments on “Squawk Box” come after another volatile week on Wall Street, marked by the Fed signaling its first Covid-era interest rate hike in March and outlining a plan to shrink its balance sheet.

The market has priced in five interest rate hikes for 2022, with a sixth one starting to gain traction for later in the year, according to the CME FedWatch tool.

Goldman Sachs late Friday increased its baseline estimate of four rate hikes to five, two days after the Fed wrapped up its January meeting.

Bank of America on Friday said it expects seven rate hikes this year.

Cramer said that if some of the forces behind the spike in inflation go away, “then why would you still have to do six, seven [rate hikes].”

The “Mad Money” host believes that recently rising inflation can be traced largely to supply chain snarls and gridlock at the nation’s ports due to the lingering pandemic.

Cramer said economists are unnecessarily pessimistic in raising their rate-hike estimates based on temporary issues. “These people just must think that there’s nothing good that’s going to happen.”

In the meantime, Cramer said Americans might need to adjust their shopping habits amid the supply chain dilemma.

“Maybe you go to Williams-Sonoma for a table that you can’t get at Restoration Hardware,” he said. “I think we got pretty spoiled as a country” in which preferred goods were usually so readily available.

Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market. Reuters contributed to this report.