Statements and economic forecasts issued by Federal Reserve officials Wednesday indicate they're in no rush to raise interest rates, says Peter Boockvar, chief market analyst with Lindsey Group.

Indeed, "the Fed is deathly afraid of a rise in rates stomping out the recovery," he told CNBC. "It's clear they will allow inflation to run higher than it should be in order to achieve that."

The Fed's long-term target for inflation is 2 percent. But it has stated a willingness to let that target be broken in the short term to boost the economy.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

The personal consumption expenditures (PCE) price index, the central bank's favored inflation measure, rose 1.6 percent in the year through April. The consumer price index gained 2.1 percent in the year through May.

As inflation rises, "what's going to be the end result is the bond market is going to start dictating policy," Boockvar noted. "Next week, [May] PCE [data] is going to point to that."

Most Fed policymakers predict the PCE price index will rise 1.5 to 1.7 percent for 2014 as a whole.

"[Markets] continue to ignore that the tapering is only three meetings away from being done. It's obviously more focused now on when the Fed is going to raise rates. To me the end of the taper is a lot more dangerous than the first rate hike," he added.

James Paulsen, chief investment strategist at Wells Capital Management, is concerned that the Fed is underplaying the inflation threat.

"The real stimulus comes when the free market starts to stimulate, and that is happening now," he told The New York Times.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

Related Stories:

• Ron Insana: Don't Look for Fed to Raise Rates Soon
• Gross: Fed's Willingness to Keep Rates Low May Buoy Stocks, Bonds