The Federal Reserve appears to be ready to increase interest rates sooner than many economists were expecting, said Alan Krueger, former chairman of President Barack Obama's Council of Economic Advisers. But he insisted on CNBC Wednesday that the central bank is not yet behind the curve based on recent economic and jobs data.
Krueger dropped a bomb into the monetary policy debate, with the release of a controversial paper back in March, which asserted that the long-term unemployed are likely lost to the labor force. His theory is that the supply of available workers may be smaller than it appears, and wage pressures are likely to develop more quickly.
Jeff Rosenberg, chief investment strategist for fixed income at BlackRock, pointed out that Krueger's work "is critical to the debate that we're having in the markets."
But unlike Krueger, Rosenberg told CNBC Wednesday that he believes the Fed is "behind the curve" on interest rates are relative to the progress of the economic recovery, and markets are on edge about it.