Fed's Fischer: 'It's about time' for rate hike

Stanley Fischer.
Fed's Fischer: Rate hike high probability in 2015   

It's "about time" for the Federal Reserve to raise rates, according to one of the central bank's top officials.

Stanley Fischer, vice chair of the Fed's board of governors and voting member on its policymaking committee, told CNBC Friday afternoon that there is a "high probability" of a rate increase this year.

He said the U.S. economy is "very close" to achieving a natural rate of unemployment, and he predicted that inflation should rise as the effect of low oil wears off "in a couple months, so it's about time."

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"We've gotten used to thinking of a zero interest rate as normal—it's far from normal," Fischer said.

The central banker also reflected on the Fed's use of the term "patience" in its statements, saying that its removal would indicate "it could happen, depending on the data, at any meeting."

He emphasized that the Fed's decisions will be dependent on economic data.

As for the world economy, Fischer said that it is good for everyone that the U.S. is seeing relative strength, so it can help support global growth.

Stanley Fischer
Eric Piermont | AFP | Getty Images
Stanley Fischer

"We are stronger at the moment, and it's better that we're stronger. And we're going to stay stronger unless something miraculous happens in other countries in the next couple of years, and that's OK," he said, adding that recent dollar strength is reflecting broader U.S. strength.

In fact, Fischer struck a positive tone for the total global economic outlook, saying there are "good reasons to be fairly optimistic."

Earlier Friday at the University of Chicago's annual U.S. Monetary Policy Forum in New York City, Fischer said that both the Federal Open Market Committee and markets are expecting that the federal funds rate will be raised "sometime this year." Although he said the Fed's balance sheet size could present a challenge, Fischer explained that he is confident the central bank has the right tools available to hike rates.

Read MoreFischer at the U.S. Monetary Policy Forum

The Fed's asset purchases provide a significant stimulus to the economy, he said in his prepared remarks, adding that the effects of quantitative easing are only now manifesting in the economy. Still the risks from QE include financial instability, Fischer said.

All told, he estimated that quantitative easing and forward guidance have lowered unemployment by 1.25 percent and upped inflation by 0.5 percent.

Fischer told CNBC he approved of Fed Chair Janet Yellen's appearances this week before D.C. lawmakers.

"The chair is not one to be bowled over very easily, as you've noticed. She gave back, and I think appropriately, she stood her ground, and that was right," he said, adding "we'll have to continue to defend ourselves, we'll have to continue to explain ourselves."

Fischer said he was "struck by how bound we are to fulfill that mandate that Congress has given us," explaining that he has never heard political discussions in Fed decision-making talks.