The Federal Reserve may be forced to raise interest rates if policymakers remain determined to bring inflation back to the 2 percent target, according to market strategist Ed Yardeni.
Yardeni issued the warning on Wednesday following the central bank's latest monetary policy decision, suggesting that the current stance might not be sufficiently restrictive to fully extinguish price pressures.
The commentary underscores a persistent divergence in the market's outlook on the Fed's trajectory.
While the central bank has held rates steady, Yardeni's assessment highlights the risk that inflation could prove stickier than anticipated, potentially requiring a hawkish pivot rather than the easing cycle many investors have priced in.
Minneapolis Fed President Neel Kashkari recently reinforced the inflation-fighting mandate, describing the labor market as stable but emphasizing that curbing price growth remains the top priority.
The debate over the appropriate policy path is intensifying as the new Fed chair, Kevin Warsh, makes his debut.