Federal Reserve Bank of Kansas City President Esther George Thursday urged the Fed to raise its interest rate.

"We would be wise to act modestly but act now. Starting now to move rates up slowly and deliberately will allow the economy to adjust to a more normal and, in my view, appropriate stance of monetary policy," she said.

George noted that low interest rate could lead unstable markets and to a surge in inflation. But she acknowledged that low interest rate may be needed "for some time."

George is not a voting member of the Federal Open Market Committee this year.