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Fed’s easing will likely lead to inflation: Economist

It's unlikely the Federal Reserve will be able to pull off a graceful ending to quantitative easing, economist Bob Brusca told CNBC. Instead, he thinks the central bank will probably allow inflation to creep up—not believing it is real—until it is too late.

"They think there's a lot of slack, and therefore when bad things happen they don't believe it. And that's the problem: When bad things happen you have to believe it," said Brusca, chief economist at Fact and Opinion Economics.

The central bank is grappling with several issues, he added.

"The Fed's balance sheet is huge. I think they kept interest rates very low for a very long period of time," Brusca said in an interview with "Power Lunch." The central bank is also juggling "too many things" and is dealing with a division among its members.

"A division is also going to make it harder to do the right thing in a timely fashion."

Read MoreWall Street worries Fed's easing will 'end badly'

Dallas Federal Reserve President Richard Fisher wrote in a Wall Street Journal op-ed this weekend that the central bank is risking keeping policy "too loose, too long." St. Louis Fed President James Bullard has repeatedly said that the Fed could start raising rates in the first quarter of 2015, earlier than expected.

Federal Reserve Chair Janet Yellen.
Saul Loeb | AFP | Getty Images
Federal Reserve Chair Janet Yellen.

Brusca is not alone in his views. According to CNBC's Fed Survey, 34 percent of respondents think the Fed's monetary policy "will end badly," either in a recession, stock market crash, high inflation or some combination.

On the other hand, 34 percent believe the central bank will "navigate a smooth transition to more normal policy."

Read MoreFed? No, GDP will move markets this week: Pro

John Lonski, chief economist at Moody's Capital Markets Group, counts himself among those who think it will end well.

"Until I begin to see this increase in reserves, this huge balance sheet, produce more in terms of loan growth, chances are it is not going to go ahead and trigger a lasting upturn by inflation," he said.

"Sure, we could get a run-up by prices over the near term, but if price growth continues to outpace wage growth, chances are that will be self-correcting."

Read More Why the Fed could start raising rates sooner than you think

He pointed to the Fed's track record to back his argument.

"The Fed did a very good job at trying to engineer a decline or reining in of bond yields that perhaps wasn't enough given that we the fact that we have problems right now in the housing sector," he said. "You could make the argument that maybe the Fed began to taper a little too early."

The Fed's two-day meeting ends Wednesday. It is expected to taper its bond-buying program by another $10 to $25 billion.

—By CNBC's Michelle Fox.

Contact US Economy

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