Consumer sentiment has dropped by over 10% month-over-month in May, according to the University of Michigan's survey, while still beating monthly forecasts. In recent comments from this week, Atlanta Federal Reserve President Raphael Bostic believes interest rates will continue to run higher for longer as progress against inflation slows.

Citi Chief US Economist Andrew Hollenhorst sits down with Yahoo Finance's Catalysts to weigh in on where the Fed currently stands on interest rates as it maneuvers an increasingly challenging inflationary environment for American consumers.

"The economy does need to cool down if you're going to cool down inflation. I'm not that worried about the PMI [Purchasing Managers Index] number showing that the economy is accelerating. If you take it very literally, that is kind of what it shows, but you want to look at it in the context of all the data. This is one survey where you ask firms are you expanding, are you contracting?" Hollenhorst details. "We have hard data on the consumer. We see retail sales that are weaker... So I'm really not seeing it in the broad swath of data. Yes, those PMIs were stronger. It's something to note, but I don't think it's the story of the economy right now."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Luke Carberry Mogan.