It's high time for the Fed to normalize, JPMorgan International Chairman Jacob Frenkel says

It’s high time for the Federal Reserve to normalize and move ahead with raising interest rates, JPMorgan International Chairman Jacob Frenkel told CNBC on Friday.

“The economy’s much more robust, labor markets are very strong and the financial markets are also strong,” he said in a “Power Lunch” interview from the sidelines of the central bank’s symposium in Jackson Hole, Wyoming.

The Fed has raised short-term interest rates twice this year, and in June, the median of Federal Open Market Committee members expected another hike by the end of the year. The Fed also is expected to announce in September when it will begin reducing its $ 4.5 trillion balance sheet.

Frenkel believes it is not up to central banks to encourage growth and productivity, but the government and those who do structural policy.

“We are talking about the need to encourage investment and growth. What do firms do today? They are doing buybacks of their shares instead of investing in plants and equipment because the financial environment encourages them and encourages other people to direct their investments to the financial sector,” he said.

Fed Chair Janet Yellen spoke on Friday at the central bank’s annual conference, offering no clues about the future of monetary policy. Instead, she focused on the history of the financial crisis and what regulators have done in response.

Interest rates are still running below the Fed’s 2 percent target. However, both Cleveland Fed President Loretta Mester and Kansas City Fed President Esther George told CNBC from the sidelines of the symposium that low inflation shouldn’t stop continued rate hikes.

Catherine Mann, chief economist of the Organization for Economic Cooperation and Development, also doesn’t think the lack of inflation should give the central bank pause.

“If we think about what’s happening with investment, 25 basis points is not going to do anything to change businesses’ attitude about whether they should undertake investment or not. But 25 basis points might realign the financial markets a little bit better with the state of the economy,” she told “Power Lunch” from the conference.

— CNBC’s Jeff Cox contributed to this report.

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