By Rex Nutting, CBS.MarketWatch.com
Last Update: 4:21 PM ET June 11, 2004
WASHINGTON (CBS.MW) -- The Federal Reserve doesn't need any more evidence about inflation to justify an increase in interest rates later this month.
Nonetheless, it will likely get more support from the economic data to be released in the coming week.
The consumer price index for May could show further acceleration in prices and could give the inflation hawks more ammunition in their battle to get interest rates moving higher, faster.
"The Fed has got to get off the ball," said Robert Gay, global head of fixed income for Commerz Bank.
The CPI will be released Tuesday at 8:30 a.m. Eastern time, just 90 minutes before key testimony from Fed Chairman Alan Greenspan on Capitol Hill. The CPI is the most important event on a very busy economic calendar. See Economic Calendar.
Economists surveyed by CBS MarketWatch estimate, on average, that the CPI rose 0.4 percent month-over-month in May, led by higher prices for gasoline and other energy sources.
"The CPI could be on the high side" added Gay. "It's not too late for the Fed, but if they don't get started very quickly, there won't be time. We're just one or two CPIs away from being uncomfortable."
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