The Federal Reserve is "way, way" behind the curve with its lack of interest rate hikes so far this year, former Dallas Fed Advisor Danielle DiMartino Booth told CNBC on Wednesday.
The minutes from the Federal Open Market Committee's meeting in September, released Wednesday, show a divided Fed. While it opted to leave rates unchanged, officials in favor of hiking are worried that waiting too long could send the country into recession.
"The risks have obviously gone up appreciably," Booth said in an interview with CNBC's "Power Lunch."
The concern is that if the Fed waits too long, it could be forced to raise rates aggressively to slow the economy.
The central bank has left the door open for a rate hike before the end of the year. It meets again in November and December.
However, Lindsey Piegza, chief economist for Stifel, Nicolaus & Co., believes there is no incentive for the Fed to raise rates thanks to slow growth, nonexistent inflation, negative business investment and the consumer under pressure with declining income.
"Certainly they may have to raise rates faster if we turn the corner into 2017 or beyond, but the risk of raising rates too fast more than offsets the risk of raising them too slow at this point," Piegza told "Power Lunch."
Traders expect the Fed to hike in December, although probability is less than 60 percent. Many don't expect it to happen in November because there is no press conference scheduled afterward and it is happening right before the presidential election.
And if the markets react violently to the election, Booth doesn't think the Fed will raise at all in 2016.
"They won't move a hair in December if there's disruption. It's not their M.O.," she said.
Piegza argued any rate increase will be based on the data, not politics. "It's not about the election being six days later. It's not about the outcome of the election or the market's reaction to the election," she said. "It's about how the U.S. economy is evolving and right now we are subpar growth, declining income, declining gains in employment, declining gains in manufacturing, inflation is still sluggishly low."
— CNBC's Jeff Cox contributed to this report.