Some policymakers and economists believe the Federal Reserve is waiting too long to raise short-term interest rates, which have stood at a record low since December 2008.

Esther George, president of the Kansas City Fed, says the central bank is repeating its policy mistake of 2004, the Financial Times reports. The central bank, led then by former Chairman Alan Greenspan, let inflation rise "persistently" above 2 percent and the job market over-expand "amid one of the most historic credit bubbles in U.S. history," she said.

The situation may look different now, but "economic trends and experience suggest otherwise," George said. She wants the Fed to act on rates now.

The personal consumption expenditures index, the Fed's favored inflation gauge, climbed only 0.2 percent in the 12 months through May. But the unemployment rate fell to a seven-year low of 5.3 percent in June.

Jim O’Sullivan of High Frequency Economics also thinks the Fed is moving too slowly. "They are a bit behind the curve," he told the FT. “They are being risk-averse and erring on the side of starting late, but by many standard models they should have started tightening before this.”

Meanwhile, the Fed's economic forecasts have proven overly optimistic in four of the last five years. The mistaken predictions result from the abnormal economic conditions of the past few years, the inherent difficulty of estimating economic growth and a bit of cultural bias at the Fed, experts tell Institutional Investor.

As for the peculiar economic factors, "things happened that the Fed didn't anticipate," Donald Kohn, a former Fed governor and now a senior fellow at the Brookings Institution, told Instiutional Investor.

A larger problem might be that "everybody's economic forecasts are bad," Alex Pollock, former president of the Federal Home Loan Bank of Chicago, and now a resident fellow at the American Enterprise Institute, told II. "The Fed is no different than everyone else."

And on the cultural front, the Fed's job is to boost the economy, so a bit of optimism is built in to the institution, experts say.

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