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Fed's Tarullo: Rate hike likely tough this year

The U.S. economy likely would not support an interest rate hike this year without signs inflation and wages are increasing, a top Federal Reserve official said Tuesday.

"I wouldn't expect it would be appropriate to raise rates," Fed Governor Daniel Tarullo told CNBC.

Tarullo, a voting member on the Fed's policy-making committee, noted his outlook could change based on developments in the economy. He sees a "good bit of uncertainty" as global trends, low energy prices and a stronger U.S. dollar put pressure on inflation.

Federal Reserve Board Governor Daniel Tarullo.
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Federal Reserve Board Governor Daniel Tarullo.

Expectations that the Fed will hike interest rates this year have diminished in recent weeks amid concerns about global growth and a weak September jobs report. Fed Governor Lael Brainard said Monday the Fed should wait to see if the U.S. recovery is thrown off course before tightening.

Vice Chairman Stanley Fischer expressed a similar sentiment recently, saying a rate hike this year is "an expectation, not a commitment" that could change based on economic developments.

Read MoreFed's Fischer says 2015 rate rise 'an expectation, not a commitment'

Tarullo on Tuesday noted some Fed officials have said hiking rates too early could cause more damage than waiting too long. He would want to see "tangible evidence" of inflation picking up and approaching the Fed's 2 percent target.

Tarullo added that there is "no question we've made progress in the labor market."

The CME Group's FedWatch, which tracks market expectations for monetary policy changes, lists a 6 and 35 percent chance of a rate hike in October and December, respectively.