WASHINGTON (MarketWatch) -- The Federal Reserve should start tightening monetary policy -- spelling higher U.S. interest rates -- "sooner rather than later," said Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, on Thursday.

"The Federal Reserve must curtail its emergency credit and financial market support programs, raise the federal-funds rate target from zero back to a more normal level, probably between 3.5% and 4.5%, and restore its balance sheet to pre-crisis size and configuration," Hoenig said in a speech at the Central Exchange in Kansas City.

Thomas Hoenig, president of the Federal Reserve Bank of Kansas City. Reuters

Hoenig will be a voting member of the Federal Open Market Committee, the panel charged with setting interest-rate policy, this year.

However, his views are likely to conflict with a majority of the central bankers, who reaffirmed only three weeks ago that economic conditions are likely to warrant keeing the fed funds rate at exceptionally low levels "for an extended period." See more on the FOMC's December policy meeting.

Hoenig didn't spell out either exactly when the Fed should begin the process of hiking rates or how fast it should proceed.

"I believe the process of returning policy to a more balanced weighing of short-run and longer-run economic and financial goals should occur sooner rather than later," he said.

Moreover, it would be a clear a mistake to wait to unwind policy until a U.S. economic recovery is clearly in full force, Hoenig said.

This would be "short-sighted" and would risk creating conditions leading "to financial excess, economic volatility and even higher unemployment at some point in the future," he said.

Hoenig also said he was more optimistic than most economists about the pace of economic growth he foresees in 2010. Specifically, he forecast that U.S. gross domestic product would exceed a 3% rate this year.