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Fed's Evans: Later rate hike better for economy

A later liftoff from near-zero interest rates will better help the U.S. economy, and the best time for a rate hike may not come until the middle of next year, a top Federal Reserve official said Monday.

In prepared remarks at Marquette University, Chicago Federal Reserve President Charles Evans contended normalizing policy too early brings risks amid pressure on inflation from low energy prices and "subdued" wage growth. However, he told reporters after the speech that the central bank is "not far" from its first rate increase in nearly a decade.

The Fed's policy-making committee held off on raising its short-term interest rate target at its September meeting amid rocky stock markets and concerns about a global slowdown. Evans—who is a voting member on the committee—contended the Fed would need to normalize gradually after the first hike to avoid shaking markets further. He called three hikes of 25 basis points "appropriate" by the end of the next year.

Charles Evans
David A. Grogan | CNBC
Charles Evans

On Monday, Evans contended that inflation headwinds from energy prices and a stronger U.S. dollar will likely not subside until the middle of next year. He noted that he was "fairly confident" the U.S. economy will reach the central bank's goals for employment within a "reasonable period," but was much less certain about inflation moving toward its 2 percent target quickly.

Read MoreFed's Dudley: Will likely raise rates later this year

Evans took on a less hawkish tone than other key officials have since the meeting.

The Fed will probably move this year, and its October meeting remains a possibility, New York Fed President William Dudley said earlier Monday. The comments follow Fed Chair Janet Yellen's remarks last week that it will likely be "appropriate" to hike rates "sometime this year."

The Fed has two meetings remaining this year in October and December.

Read MoreYellen: Rate hike likely appropriate this year

Reuters contributed to this report