"Philadelphia Fed President Charles Plosser said the Fed risks losing credibility by waiting too long to raise rates, and economic data are already suggesting a need to tighten policy. Chicago's Charles Evans and Atlanta's Dennis Lockhart countered that low inflation and labor-market slack will allow the central bank to wait until the second half of 2015 or 2016," reports Bloomberg here.

Plosser, a conservative economist who thinks the Federal Reserve should focus on managing interest rates and inflation expectations because it can't effectively fight unemployment, was rated last year as the worst of the 15 Fed regional presidents and other senior Fed officials at predicting the actual direction of interest rates, inflation and unemployment, the Wall St. Journal reported here. (link repaired, but you'll need a wsj.com account)

But Plosser is still trying to get it right. He told Bloomberg TV today that "we are closer than a lot of people might think" to the first interest-rate increase since 2006. Wait too long, he said, and "we'll lose credibility. We may lose control of inflation." He's not completely alone: "St. Louis Fed President James Bullard warned this week that inflation will rise above the Fed's target late next year," Bloomberg said. Plosser added: "We are on a path that says low for long and we have no plans to raise interest rates anytime soon, yet as the data keeps telling us, we ought to be raising rates." Unemployment fell to 6.1% in June, lowest since 2008. Inflation remains below the Fed's 2% target.

Atlanta's Lockhart "cautioned against pulling the trigger too soon, arguing there is still not enough evidence the Fed is close to achieving its twin goals of maximum employment and price stability." Wages are still flat, he added.

"Evans also countered Plosser's views on consumer prices.... He said inflation is likely to stay below the Fed's objective for a few years, and that low wage growth is one of 'many signs of continued resource slack.'"