A split on interest-rate hike

Two Federal Reserve Bank presidents - Philadelphia's Charles Plosser and Chicago's Charles Evans - have expressed different opinions on whether the central bank should raise interest rates in the near future.

Plosser said the Fed risks losing credibility by waiting too long to raise interest rates, and economic data are pointing to a need to tighten.

"We are closer than a lot of people might think," Plosser said Friday in a Bloomberg Television interview in Jackson Hole, Wyo. If the Fed waits too long, he said, "we'll lose credibility. We may lose control of inflation."

Fed officials are approaching their goals for full employment and price stability faster than they had forecast, forcing them to consider accelerating their first rate increase since 2006. St. Louis Fed president James Bullard warned this week that inflation will rise above the Fed's target late next year.

Unemployment fell to 6.1 percent in June, the lowest level in almost six years. Consumer-price inflation accelerated to 1.8 percent in May, according to the Fed's preferred gauge, the biggest 12-month increase since October 2012 though still below the Fed's 2 percent goal.

"We may lose control in the financial markets where we find ourselves later on having to raise rates faster and higher than we otherwise would like to because we are so far behind that the markets get ahead of us," Plosser said. "That could be very disruptive."

Evans countered Plosser's views on inflation in a separate Bloomberg Television interview. Evans said inflation is likely to stay below the Fed's objective for a few years, and low wage growth is one of "many signs of continued resource slack."

"It could well be the case that it should be early 2016 before" the Fed raises the benchmark interest rate, he said.

Most Federal Open Market Committee participants reiterated their view last month that the Fed will refrain from raising its benchmark rate until 2015.