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When Will the Fed Raise Rates?

The Kansas City Fed's Thomas Hoenig made some news Tuesday claiming that the Fed should tighten "sooner rather than later." This was in stark contrast to NY Fed president Bill Dudley, who echoed the FOMC's line that rates will stay low for an "extended period."

Who to trust?

Although both men are sufficiently vague about their timelines, I'll side with Dudley here. All signs point to the current recovery being a jobless one. And during the past two such expansions, the Fed didn't start tightening until more than two years after the recession ended and the unemployment rate had fallen substantially:

Our recession most likely ended in the third quarter, so unless by "sooner" Hoenig means the fourth-quarter of 2011, there's no reason to think the Fed as an institution is anywhere near his view.