The Minneapolis Fed President Narayana Kocherlakota said on Tuesday that the Fed should delay its interest rate hike until the second half of 2016. He added that the Fed should hike interest rate gradually to 2% by the end of 2017.

Kocherlakota noted that "the ongoing conversation about tightening monetary policy" may be a risk to the U.S. economy.

The Minneapolis Fed president believes that it is better not raise interest rate this year as employment grows slowly and inflation is still low.

He expects that the U.S. economy would need at least three more years of labour market improvement, and inflation will not increase back to the Fed's 2% target until 2018.