(Bloomberg) -- Sticky global inflation and a pair of surprisingly hawkish central bank announcements has Franklin Templeton’s fixed-income chief wary of saying that US bond yields are past their peaks. 

Sonal Desai, chief investment officer for Franklin Templeton Fixed Income, says there’s still a chance that the yield on US 10-year bonds tops October’s 4.34% level if inflation accelerates faster than expected in the coming months, forcing the Federal Reserve to keep raising interest rates.

Economists surveyed by Bloomberg expect US policymakers to leave their key rate unchanged when they meet next week, though focus will turn to an upcoming reading of consumer price data for May. A potential “pause,” however, stands to turn into a “skip” should inflation pick back up and a recession prove mild, said Desai. 

“There are people who still believe that’s the end of the cycle,” she said in a Thursday interview in New York. “I don’t think we can say that yet because we really have sticky inflation.”

Desai, who oversees Franklin’s municipal, corporate credit, money market and global debt teams, pointed to recent rate decisions in Australia and Canada as a warning. Both the Royal Bank of Australia and the Bank of Canada recently surprised Wall Street by unexpectedly tightening rates, sending global bond yields soaring.

She joins a growing chorus on Wall Street who are wary of embracing the prospect of a full-on Fed pause or pivot to rate cuts yet. Earlier this week, the Treasury market even briefly restored the full pricing of Fed tightening by July.

The Federal Open Market Committee’s June meeting will be “live,” Desai said, with policymakers closely watching inflation data.

--With assistance from Zijia Song.

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