CNBC’s Jim Cramer told investors that Wall Street is always looking for signals — especially from the Federal Reserve. While he said market action isn’t always dictated by the Fed, stocks can be highly-reactive to the central bank when the economy is at an inflection point.

“When the Federal Reserve matters — when it’s tightening too aggressively or when it’s easing, it’s about to start easing — well then it really, really matters,” he said.

While the Fed can weaken the economy by raising interest rates, Cramer emphasized that it can also spur economic growth by cutting them. When the economy cools down, he said, the Fed will often stop hiking up rates and then start to bring them down. Cheaper overnight borrowing for banks mean that consumers and businesses have less incentive to save money and more incentive to spend or invest, Cramer said. Increased consumer spending and business growth create a “virtuous circle,” Cramer said, as expanding companies hire and pay more employees who then go on to spend more money.