Inflation in the U.S. may not be able to go any higher in the current economic cycle, CNBC’s Jim Cramer said Tuesday on the heels of yet another hot price index report.

“I think this is the highest I’ve ever seen these numbers, and they merit attention, they merit what Mr. Bullard said yesterday, and I think that we should continue to expect that Bullard’s going to be right,” Cramer said, referencing St. Louis Federal Reserve President James Bullard urging central bankers to “front-load” interest rate hikes to fight spiraling inflation.

“But I also think that when you see this kind of number, you have to wonder how sustainable it is. I mean, this is like, everything is red hot,” the “Mad Money” host added. “It’s just not sustainable. It’s too high.”

The producer price index, which measures wholesale inflation, increased 1% in January. That’s twice the Dow Jones estimate. Prices skyrocketed 9.7% from a year ago, just short of the biggest jump on record. The latest PPI came days after January’s consumer price index — which measures retail inflation — showed a year-over-year rise of 7.5%, further increasing pressure on the Fed to take action cool things off.

“We’re in a market where everything is Fed and Putin. Powell, Putin. Powell, Putin,” Cramer said, suggesting that investors might rest a little easier if inflation is truly peaking and Russia is really deescalating the Ukraine crisis.

Separate from rates, the Fed has been winding down its massive Covid-era bond-buying program, put in place nearly two years ago to support the pandemic-stricken economy. Once it ends asset purchases, sometime in March at the current pace, the Fed has to figure out when to start reducing its balance sheet — in other words, when to starting letting the fixed-income assets mature without reinvesting them.

Some people worry that bond purchases won’t be complete before the Fed’s meeting in mid-March, when the first of what the market sees as seven rate hikes this year is widely expected.

Cramer said the Fed should not only end its bond buying but should actually sell assets. “Right now, I mean, Jay Powell’s saying, ‘Oh, sheesh, man, it’s not going my way.’ And it just isn’t. And he should be selling bonds,” Cramer said of the Fed chairman Jerome Powell. He added that while Powell may be a target for criticism in the near-term, inflation will likely come down enough to ease worries.

“I think he looks at this number and has to be thinking, ‘I don’t think this number’s sustainable,'” said Cramer, who’s been supportive of Powell and his handling of monetary policy during Covid. “If we see a peak, let’s say the next number is 8.5%, which would still be horrendous, people are gonna say, ‘I guess that was it for inflation.”

— Cramer made these comments Tuesday on CNBC’s “Squawk Box” and “Squawk on the Street.” Sign up now for the CNBC Investing Club to follow Cramer’s every move in the market.

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