Friday’s Consumer Price Index (CPI) data showing inflation hit a 40-year high in May has aggravated fears of a recession — and one market strategist suggests that panicking investors could just worsen the economic outlook.

“The biggest thing to fear is fear itself right now,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, told Yahoo Finance on Friday, after the CPI data came out, paraphrasing FDR.

“The fear starts to feed on itself,” she added. “I've heard institutional investors fretting about the high airfares that they're looking at for their family summer vacation. So this is not just a low-income consumer problem where the inflation is starting to take a bite and cause some consternation.”

Indeed, soaring inflation has started to take a toll on consumers’ moods. Consumer sentiment hit a nadir in June, according to the University of Michigan's closely watched Surveys of Consumers consumer sentiment index, also released on Friday. That index sank to 50.2, the lowest it’s been since the survey began in the 1970s.

“I do feel the frustration with this inflation backdrop has really seeped into the investor community this week,” Calvasina says.

Still, her team at RBC believes that we’ll see moderation in core CPI, which excludes more volatile costs of food and gas, by the end of the year.

For its part, the Fed will have to walk a tightrope of raising interest rates high enough to cool inflation but not so steep that it takes a toll on jobs and triggers a recession.

“It really does come down to whether or not the Fed is going to pull off this landing,” she said, adding that the market could even be okay with a “bumpy landing.”

Still, the World Bank on Tuesday warned that the global economy faces the risk of “stagflation,” consisting of significant slowdown in economic growth accompanied by high prices. Investors will watch closely when the Fed meets next week, when it is expected to continue its path of raising rates to bring down costs.