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Janet Yellen is willing to let the economy run hot: RBS chief US economist

Federal Reserve policymakers may not raise interest rates in June because Chair Janet Yellen would rather let the economy overheat than hike too soon, financial professionals said Friday.

Investors are bracing for a summer rate increase after minutes from the Fed's April meeting showed Federal Open Market Committee members are likely to move in June if data show second-quarter growth in the U.S. economy.

Key economic data are coming Friday morning with the May employment report.

Still, Yellen remains fundamentally cautious, especially with a referendum on the U.K.'s European Union membership scheduled just one week after the FOMC's June 14-15 meeting.

"If they don't go in June and we have Brexit, or something else that prevents them from going in July, I don't think Janet Yellen is going to say, 'Darn, I should've taken the opportunity," RBS chief U.S. economist Michelle Girard told "Squawk Box."

"If I'm Janet Yellen, listen to what she said. She wants to be cautious. She wants to make a mistake of going too long. Let it run hot," she said.

Girard, who calls herself a hawk, said low rates have caused misallocation of resources, which has in turn restrained economic growth. The Fed would not be in a bind had it raised rates earlier, but the case for a rate hike is less compelling today than it was a year or two ago, she added.

Jason Trennert, managing partner at Strategas Research Partners, said he also believes Yellen is OK with allowing the economy to heat up and wage inflation to continue on its upward path.

However, the economic stimulus effect of the Fed's easy money policy has been "sterilized" by over-regulation under the Obama administration, he added.