The campaign is particularly troublesome for Yellen because she owes her job, in large part, to progressives who revolted against President Barack Obama's first choice for the Fed chair position: former Treasury Secretary Larry Summers. Some on the left now say if Yellen moves to raise rates this month she would be betraying her strongest supporters while potentially making it much more difficult for Hillary Clinton—or Bernie Sanders or Joe Biden—to hold onto the White House next fall.
"I was excited when she was nominated," Ady Barkan, leader of the progressive group Fed Up, told Politico, adding that it is "a huge moment" for Yellen to "to display real leadership."
On the other side of the debate are many economists who argue that the time is long past for the Fed to boost rates for the first time in more than nine years with unemployment at just 5.1 percent amid signs of labor market tightening that could accelerate quickly and put significant upward pressure on wages and prices.
"The economy ... can cope with higher rates, and needs them, given the tightness of the labor market," Pantheon Macroeconomics' Ian Shepherdson said in a note to clients Monday.
Yellen herself has repeatedly indicated a desire to raise rates this year only to hold back at every meeting as international market turmoil, a slowdown in China and the rest of the developing world, and mixed U.S. economic data clouded the picture.
But from a purely political perspective, Democrats should probably be hoping the Fed does raise rates this week.
Because if the central bank waits until December—the next meeting after September with a news conference—it could wind up having to make bigger and faster hikes that could be even more disruptive to a U.S. economy already growing at less than 3 percent.