Concerns that Federal Reserve Chair Janet Yellen is ignoring the threat of inflation, like Ben Bernanke did with the subprime mortgage market, are probably exaggerated, former Federal Reserve Bank of Minneapolis President Gary Stern said Tuesday.
"Fundamental underlying inflation doesn't look to me like it's getting ready to accelerate by any appreciable amount right now," Stern said in an interview with CNBC's "Closing Bell."
"There's a lot of inertia in the inflation market. So when inflation is low it tends to stay low."
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The Consumer Price Index jumped 0.4 percent in May, causing some to question whether the Fed can wait until mid-2015 to raise interest rates. The index, which is the market's most widely followed inflation measure, is trending at a 2.1 percent annualized rate.
The Fed uses the Personal Consumption Expenditures, which is expected to measure about 1.6 percent in May, well above the 0.9 percent in April.
Stern is not concerned about the CPI. While some components, like rent, medical care and clothing prices may be rising, other components, the cost of technology and electronic items, have gone down, he noted.
"The environment is more balanced," he said.
That said, Stern has a "quibble" with the Fed's willingness to tolerate 2 percent inflation or higher.
"If it goes to 2.5 percent or perhaps a little more, it might be very hard to reign in or bring back down to the target," Stern said.
He believes the time for the Fed to start tightening is still several months off, probably early next year.
"I don't think the Fed wants to surprise market participants at all so I think we will get plenty of signals, plenty of communication before they actually act."
—By CNBC's Michelle Fox. CNBC's Jeff Cox contributed to this report.