Esther George, president of the Federal Reserve Bank of Kansas City, laid out her case for raising short-term interest rates Thursday in an interview with The Wall Street Journal.

The Fed's benchmark interest rate, the federal-funds rate, has been near zero for more than seven years and is negative when adjusted for inflation. Low rates risk causing imbalances in the financial system, including a booming commercial real-estate market, which could undermine the expansion, said Ms. George, a prominent skeptic of the Fed's easy money policies who dissented at the central bank's July policy meeting when officials declined to raise rates.

Her views about the economy haven't changed much since then, when she was prepared to push rates up, she said. The Fed has held its benchmark rate in a range between 0.25% and 0.5% since December. Several officials have said they expect to raise it this year, but haven't agreed on when to act.

"Today my views are it is time to move," she said. "Where I was in July made sense to me and it still makes sense to me."

"I don't see better outcomes from waiting."

Ms. George was speaking on the sidelines of the Fed's annual retreat in Jackson Hole, Wyo. The Kansas City Fed hosts the event, which makes her the master of ceremonies.

Inflation isn't far from the Fed's 2% objective and the unemployment rate is low, meaning the job market is near what officials consider to be full employment. That presents an opportunity to push rates higher, she said.

Ms. George is looking to raise short-term rates to around 3% over the next two or three years, she said. However she added she doesn't want to raise rates so much that the Fed slows down an already slow-growing economy.

"I look at it in the context of removing accommodation," she said.

Her overall economic outlook was modest, and so she supports Fed Chairwoman Janet Yellen's plan to move rates up gradually. She described consumer spending and labor markets as bright spots in the economy, and wages are on the rise, but business investment remains disappointing, she said. She expects economic output to grow modestly this year, by just 2%.

All in all, she said, "the data look alright to me."

Write to Jon Hilsenrath at jon.hilsenrath@wsj.com

(END) Dow Jones Newswires

August 25, 2016 22:45 ET (02:45 GMT)