For the Federal Reserve, the decision to scale back its bond-buying stimulus and to what degree is a bit of a double-edged sword, investment strategist Jim Paulsen told CNBC on Wednesday.
On one hand, the Fed's policies of low interest rates and bond purchases are designed to stimulate the economy without creating substantial inflation. On the other hand, the central bank would like to wind down its stimulus program without disrupting markets.
The Fed's conundrum became more complicated with news this week that consumer prices recorded their largest increase in more than a year in May as costs for a range of goods and services rose.
To Paulsen, chief investment strategist for Wells Capital Management, "whatever they do is going to have impact." He thinks its consideration of inflation will be key, though.
"One of the greatest taxes you can impose on the middle class of America is a significant, problematic inflation run that eats up the purchasing power of the middle class wage earner," Paulsen said on "Squawk on the Street."