Renowned New York University economist Nouriel Roubini sees a danger of the Federal Reserve waiting too long or not waiting long enough to raise short-term interest rates.

Investors were abuzz last week, when Fed Chair Janet Yellen said the central bank may raise rates earlier than many of them expected.

"They could start too soon and hike rates too much, and that could lead to market consequences like we saw last year when there was a surprise with the Fed tapering," Roubini told CNBC.

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Bonds tumbled in 2013 after Fed officials indicated they were preparing to cut the central bank's bond purchases.

Then there's the risk of waiting too long to raise rates, Roubini said. "Last time around it took them two years to normalize [the federal funds rate] from 5 to 5.25 [percent], too little too late. . . . They created the biggest housing, real estate credit and equity bubble," he said.

Now, "it's going to take them up to four years to go from zero to a neutral 4 percent. The risk is that we are going to create another huge bubble in the economy," Roubini said.

Some Fed watchers took Yellen's remarks last week to mean the Fed could hike rates as soon as April 2015. But San Francisco Fed President John Williams doused that speculation in an interview published in The Washington Post.

"I don’t expect us to start raising interest rates until the second half of 2015," he said. "Any interest rates increases we do have in 2015 will be relatively gradual."

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