One of the things that could knock the U.S. central bank off its rate-hiking schedule is a rise in disruptive corporate deal-making, Chicago Fed President Charles Evans said Tuesday.
Without mentioning any specific mergers or acquisitions, Evans said transformative moves could put pressure on inflation which in turn would slow the Fed from continuing on its path toward policy normalization. He said he remains confident in the economy but is "nervous" about inflation.
"In a world of global competition and new technology, I think competition is coming from new places. New partners are choosing to merge and sort of changing the marketplace and [bringing] more competitive pressures on price margins," Evans told CNBC's "Squawk on the Street" program.
"If that's the case, and I think that's just speculative at this point, then it means that we need even more accommodation to get inflation up," he added.
The Fed is charged with two goals: maximum employment and price stability. While the unemployment rate has tumbled to 4.3 percent during the Fed's historically aggressive policy moves since the financial crisis, inflation has remained elusive.
The Fed has set 2 percent as an inflation goal, but last week reduced its forecast for this year from 1.9 percent to 1.6 percent. Despite the miss on inflation, the policymaking Federal Open Market Committee voted to hike rates a quarter point, and has indicated one more increase is on the way later this year.
However, Evans said more signs of downward pressure on inflation would indicate "that we need even more accommodation to get inflation up, because the changes in price margins would reduce relative prices."