Fed's Kocherlakota: 2015 rate rise not appropriate

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said Friday he does not believe the central bank should raise interest rates this year, and policymakers may have to consider further quantitative easing.

"Barring big changes in the data between now and September ... I don't see a near-term increase in interest rates as being appropriate, and by near term I mean really through the course of 2015," he said in an interview on CNBC's "Squawk Box."

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If the Fed raises interest rates given the current inflation outlook, market watchers will conclude the central bank doesn't think it can hit 2 percent inflation, he said. As a result, the Fed's credibility in terms of people's beliefs about its long-term inflation goals would suffer, he added.

"You're already seeing that in market data, so this is not some economic theory. This is actually reality," he said.

It will take a few years to get back to the Fed's inflation target, he said.

Asked whether the Fed should engage in more quantitative easing, Kocherlakota said the situation right now would call for consideration of those types of steps.

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Kocherlakota spoke to CNBC in an interview from Jackson Hole, Wyoming, ahead of the Fed's annual retreat. He is not a voting member of the Federal Open Market Committee, which could vote at its September meeting to raise interest rates for the first time in nine years.

The Fed has held its benchmark fed funds rate near zero since December 2008.

Fed Vice Chair Stanley Fischer will appear on CNBC's "Squawk on the Street" at 11:30 a.m. EDT.

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Correction: An earlier version misstated Kocherlakota's gender in one reference.