Policymakers have not seen the robust job creation that they'd like to see, the Fed's Fisher explained, adding that increasing the labor force participation rate is a very important. "We are moving forward on this, but it's just very slow," he said. "Monetary policy works with a lag and we have to take that into account as well."
As for economic growth, he said, "I think we'll see things picking up through the year. And so I wouldn't be surprised to see real GDP growing at a rate of above 2.5 percent as we get toward the end of the year. Not what I'd want. I'd like little more."
Fed Chairman Bernanke is scheduled to talk about the economy before the Joint Economic Committee on Wednesday morning—hours before the central bank releases minutes from its April 30-May 1 meeting.
(Read More: Fed Keeps Interest Rates Low, Continues Bond Buying Program)
The Fed's next policy meeting is scheduled on June 18-19, with Bernanke scheduled to hold a news conference afterwards.
Fisher said the U.S. needs a rational fiscal policy to help spur economic growth. The Fed is basically underwriting Congress for not doing its job, he argued, saying he's an "equal opportunity basher" of both Democrats and Republicans.
Cheap money has made rich people richer, but hasn't done quite as much for working Americans, he explained.
—By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC. Reuters also contributed to this report.
CORRECTION: An earlier version of this story incorrectly said Dallas Fed President Richard Fisher told CNBC the Federal Reserve should go from "wild turkey" monetary policy to "cold turkey" overnight. Instead, Fisher said the Fed should not go from "wild turkey" monetary policy to "cold turkey" overnight.