Warren Buffett recently stated that he does not think it is time to raise interest rates. While the Fed Chairman does not have to (nor should have to) listen to business leaders when making monetary policy decisions and Buffett may have some self-interest involved, Buffett may have a point.
America seems to be progressing from the great recession, but is by no means free and clear of economic troubles. Unemployment may have bounced back, but the labor force participation rate is still down from pre-recession levels. Still, progress is clear and America is steadily regaining its financial footing. America, if America was in an isolated bubble, would most likely be ready for an increase in rates.
However, America is not in an isolated bubble. Yellen has to worry about a Chinese economic slowdown, Euro instability, and an increasing American dollar value when making a decision. So who is right? The answer is nobody. It is not clear what the “correct” decision is and when exactly rates should rise. However, I would caution America from pursuing a monetary policy that over-values the situation outside America. While all economies are intrinsically linked through the global market, America cannot always wait for the perfect moment to raise rates. There will always be potential economic situations abroad that would prevent America from making monetary policy moves. The key is to evaluate the situations then make an informed choice.