San Francisco Federal Reserve President John Williams said hiking the benchmark interest rate in the summer of 2015 is a "reasonable guess" based on the current economic progress, noting a broad improvement the labor market.
"When we actually start to raise rates will depend on how the economy is doing…. we really want to be data dependent," Williams told CNBC at the annual Jackson Hole symposium in Wyoming on Thursday.
With wage growth currently at 2 percent, Williams said he expects nominal wages to pick up as inflation and productivity rise.
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"To my mind, a normal rate of wage growth would be something like 3 [or] 3.5 percent," he said. "That would be consistent with the 2 percent inflation goal and the productivity growth we're seeing."
The San Francisco-based 12th District of the Federal Reserve ranks first among the districts in size of its economy.
"I can tell you one thing about the Bay area economy: It's booming!" Williams said, noting the bustling housing and the tech industries as strong pints.
He said investors will have to wait and see if the tech industry can nab the kind of robust growth it saw during the digital revolution of the '90s, but "right now what we're seeing is an economy that's really strong and more dynamic."
Looking forward, Williams sees potential real GDP growth to come in around 2 percent, in part, because labor force growth is lower than historical averages as baby boomers retire.
However, he said potential growth could get back up to 2.5 percent if productivity growth ramps up.
On Wednesday, minutes from the Federal Reserve's July meeting led investors to believe the central bank was looking for confirmation in the labor market's recovery before raising rates.
At the July meeting, the Federal Reserve's Open Market Committee reduced its monthly bond purchasing program by another $10 billion and held its targeted funds rate near zero.
—By CNBC's Karma Allen.