NEW YORK ( TheStreet) -- The Federal Reserve may not be in any rush to raise rates, but one economist thinks the central bank needs to pull the trigger sooner rather than later.
"The phraseology seems to use words like 'several' when they talk about people who want to raise rates, and 'many' when they talk about people who want to keep rates where they are," said Bob Johnson, director of economic analysis at Morningstar. "There's obviously a crowd that thinks they should raise it sooner than later, and a crowd that thinks we should keep rates low for a while, so there's still no real agreement."
In its 21-page minutes, the Fed provided details on how it would communicate a rate hike to investors and the press once one happens -- which is a telling point, in Johnson's view. "If they've gone into that much detail thinking about this, it tells me they're thinking about rate increase sooner than later," he said.
Johnson thinks the economic data in the coming months will be weaker than forecast, partly due to the harsh winter. This could give the central bank reason to postpone its apparent summer 2015 timetable to normalize monetary policy. Johnson hopes the FOMC doesn't take that opportunity. "We need to get rates in the short run back up to where inflation was, so as far as I'm concerned, the sooner the better [for a rate hike]."
The fed funds rate has remained near zero since December 2008, following the heart of the recent recession. Rates haven't increased since 2006, and at some point, the economy needs to stand on its own two feet.
Johnson doesn't see raising interest rates as a threat to the economy, even though some economists warn that the economy isn't ready, and that a rate hike will put more upward pressure on an already strong dollar. "I think they could move rates up some and it wouldn't make a big difference," he said. "People are not not buying a home because rates are 3.5% instead of 3.25%. By [the Fed] saying we'll raise rates, people might get more excited about housing."
In other words, buyers who are sitting on the sidelines may start to feel pressure to buy homes before interest rates rise.
Aside from interest rates, the Fed also commented on how low oil prices could hurt overall economic growth: "...especially if the slowing took place after most of the positive effects of lower energy prices on growth in household spending had occurred," the minutes said.
Johnson agrees with the Fed's sentiment. "We're going to see an increase perhaps in consumer spending, although that hasn't happened in spades yet," he said. "At the same time, we'll see business investment in the energy patch come down, so energy is not a one-way street."
-Written by Scott Gamm in New York.