WASHINGTON Tue Feb 10, 2015 12:04pm EST

San Francisco Federal Reserve Bank President John Williams said the time for the U.S. central bank to raise interest rates was getting "closer and closer," as he warned of the risks of the Fed falling behind the curve, the Financial Times reported on Tuesday.

Economic conditions are “getting closer and closer to those where it makes sense to really start thinking seriously about starting this process of normalization,” Williams told the FT in an interview.

The newspaper said Williams said the Fed might have to hike borrowing costs "much more dramatically" than otherwise if it waited too long, saying it was better to move sooner and raise rates "gradually, thoughtfully."

The Fed has held benchmark overnight rates near zero since December 2008, but is expecting to begin bumping them up sometime later this year.

In the interview, Williams made clear he felt the inflation-dampening impact of falling oil prices and a strong dollar would fade over time.

"Those influences will wane and this basic force of a strong labor market, strong economy, will ... become the dominant theme, and to my mind push wages up to 3-3.5 percent and push inflation back to 2 percent,” he said.

Williams said the question of whether to raise rates in June or later would be "in play" at that point, but he did not commit to voting for a move at that time, the Financial Times said. Williams is a voting member of the Fed's policy committee this year.

He told the paper that low long-term U.S. bond yields were more likely the result of global conditions than fears over the U.S. outlook.