NEW YORK (TheStreet) -- Inflation isn't likely to hit the Federal Reserve's 2% target anytime soon, one economist says, further delaying the Fed's plans to start raising interest rates.

"[That confidence] is not going to happen soon," said Ward McCarthy, chief financial economist at global investment bank Jefferies. "I think it's most likely to be something that happens in the earliest of the third quarter and really more likely in the fourth quarter."

Tepid inflation through the fall could quell Wall Street's expectations for a June or September rate hike. In her remarks to the Senate Banking Committee, Fed Chair Janet Yellen underscored the importance of inflation as a criterion for pushing the Fed funds rate higher.

Inflation has been pushed down by the precipitous fall in energy prices. The consumer price index, although not the central bank's preferred inflation gauge, will be released Thursday. Economists expect the CPI to have dropped 0.6% in January.

"In the next several months or so, odds of inflation starting to rise towards 2% still seem low," wrote ITG Chief Economist Steve Blitz in a note Tuesday.

For investors trying to read the tea leaves, Yellen was careful to play both sides: "...even after employment and inflation are near levels consistent with our dual mandate, economic conditions may, for some time, warrant keeping the federal funds rate below levels the Committee views as normal in the longer run," she said.

What wasn't mentioned in Yellen's prepared remarks was the dollar's strength. Raising rates would put more upward pressure on the dollar, posing headwinds for stocks, but also making it tougher for inflation to rise.

"Commodity prices are determined in global markets and are priced in dollars," McCarthy said. "When the dollar is appreciating, it makes it more difficult for the commodity markets to stabilize and to also rise, which is what we need to see inflation move towards the Fed's target. I think the strong dollar could delay a rate hike."

Yellen also commented on the 'patience' language in its statement, hinting at the removal of the term. She insisted that such a move won't necessarily cause a rate hike to occur "in a couple of meetings," but that it could occur at "any meeting."

-Written by Scott Gamm in New York.

Follow  @ScottGamm.