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The trouble with the Fed’s inflation call

A plausible conclusion, then, is “that the current near-zero rate of inflation can mostly be attributed to the temporary effects of falling prices for energy and non-energy imports,” Yellen stated.

“If so, the 12-month change in total PCE prices [referring to the Fed’s preferred measure of inflation] is likely to rebound to 1.5 percent or higher in 2016, barring a further substantial drop in crude oil prices and provided that the dollar does not appreciate further,” she added.

Yellen’s thesis that inflation is set to rise back to 2 percent is also predicated on the view that “prospects for the U.S. economy generally appear solid.”

Landing the plane, the Fed chair made the case for a rate hike in 2015, reasoning that moving before inflation actually hits 2 percent will obviate the need for a series swift rate hikes.

However, if the Fed intends to make policy based on its models of what the future will look like rather than on actual data, it has a bit of a problem: Its own (questionable) track record.

Over the past few years, the Fed’s own economic growth forecasts have consistently proven too bullish. For instance, three years ago, the Fed expected to see real gross domestic product (GDP) growth of 3.0 to 3.8 percent this year; currently, just 2.1 percent growth is expected. Needless to say, inflation forecasts have also run too hot: back in 2012, inflation of 1.8 to 2.0 percent was anticipated for 2015.

The concern is that if the Fed is looking to similarly bullish models for its inspiration to raise rates, the central bank could be led to move too quickly.

“You do have to use models to project where things are going, because policy has to be forward-looking, and then if they’re wrong on the activity front then they’ll start to make adjustments,” said Robert Murphy, associate professor of economics at Boston College.

That said, “my view is that you could wait a little bit longer to be more certain,” especially given the low level of wage increases.

While Murphy agrees that monetary policies works with a substantial lag, “I’m not worried about reaching that 2 percent inflation and then having it suddenly take off. Inflation tends to be a persistent data series, and it won’t suddenly jump from 1.5 to 4 to 8,” particularly in the current environment.

Read MoreCould negative rates be next on the Fed’s policy menu?

Haverford economist Carola Binder, who has done substantial work on inflation expectations, similarly expressed that “I hope we will see much stronger evidence of both price and wage growth before monetary policy tightening begins.”

Binder wrote to CNBC.com from a conference on household economic decision-making at the Cleveland Fed.

She pointed out that households “are very uncertain about inflation and probably unaware of the Fed’s target,” so even if inflation does briefly exceed the Fed’s target, she doesn’t think that will foster “a big rise in inflation expectation.”

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