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Jan 8 (Reuters) - U.S. core inflation needs to rise sharply toward 2 percent, wages need to rise faster, and market-based measures of inflation expectations need to improve before the Federal Reserve raises rates, a top Fed official said on Thursday.

So far, however, core inflation shows no sign of moving up, wage growth has improved only slightly, and market-based inflation expectations are slipping, Minneapolis Fed President Narayana Kocherlakota said at a town hall at his bank's headquarters.

Kocherlakota is one of only two Fed officials who favor delaying raising interest rates until 2016. Most of his colleagues believe rates should start to rise this year.

(Reporting by Ann Saphir; Editing by Richard Chang)