This, from Dean Baker, is similar to what I was trying to say:
The Fed and the Quest to Raise Rates: The Federal Reserve Board’s Open Market Committee (FOMC) voted not to raise interest rates at today’s meeting, but their statement indicates that they are still very much looking toward further rate hikes this year. It is difficult to see reason for this urgency.
The justification for raising rates is to prevent inflation from getting out of control, but inflation has been running well below the Fed’s 2.0 percent target for years. ... In fact, since wages badly lagged productivity growth during the recession, the Fed should be prepared to allow for a period in which real wage growth slightly outpaces productivity growth in order to restore the pre-recession split between labor and capital. If preemptive steps are taken by the Fed in the near future that prevent workers from regaining their share of national income, that implies the use of the Fed’s power to make permanent the shift from wages to profits that took place in the recession.
The most recent data provide much more reason for concern that the economy is slowing more than inflation is accelerating. Nominal retail sales declined in both January and February. Construction is at best mixed with residential construction being close to flat in recent months and private non-residential construction falling slightly in recent months. The continuing rise in the trade deficit is a further drag on growth. In the current environment, it is difficult to argue that the economy is growing too rapidly and that the Fed must slow growth.
On the inflation side, there is little prospect that the core inflation rate will even reach 2.0 percent. ...
In addition to the lack of any noticeable price inflation, there is no clear upward trend in wage growth. In fact, the most recent data suggest a modest slowing of wage growth. ...
Furthermore, there are many other measures indicating that there continues to be considerable slack in the labor market despite the relatively low unemployment. There are no plausible explanations for the sharp drop in the employment rate of prime-age workers at all education levels from pre-recession levels, apart from the weakness of the labor market. The amount of involuntary part-time employment continues to be unusually high in spite of recent declines. And the duration measures of unemployment spells and the share of unemployment due to voluntary quits are both much closer to recession levels than business cycle peaks.
In short, there seems little justification for the Fed’s desire to raise interest rates. With no evidence of inflation posing a problem any time soon, the Fed should be looking to boost the economy rather than slow it.