San Francisco Fed President John Williams said in a speech on Wednesday that the Fed should start raising its interest rate "sooner rather than later".

"The first step in bringing policy closer to normal was when we ended QE. The next appropriate step is to raise rates. My preference is sooner rather than later," he said.

Williams noted that if the Fed waits longer to raise its interest rates, the economy could generate imbalances, "leading to either excessive inflation or an economic correction and recession".