Federal Reserve Bank of Cleveland President Loretta Mester said on Wednesday that the Fed could start raising its interest rate right now.

"The economy can handle an increase in the fed funds rate. A small increase in interest rates from zero is not tight monetary policy, and with the economic progress we've made and that I expect to continue, monetary policy can take a step back from the emergency measure of zero interest rates," she said.

Mester expects the U.S. economy to expand 2.75-3% by the rest of this year and next year. She added that the situation in China and Greece should have a "limited impact on the U.S. economy because our direct exposure via trade and banking is limited".

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