The Federal Reserve wants to raise interest rates, but Fed Chair Janet Yellen has a big challenge ahead in how she communicates the central bank's decision, Pimco's chief economist Paul McCulley told CNBC Thursday.
"I think the economy is improving in a very meaningful sort of way, and I think the Fed wants to get off of zero," McCulley said.
"Getting off of zero is not saying they are behind the curve, it's not saying we have an inflation problem, it is simply declaring victory on getting out of the liquidity trap and that's a very delicate communication strategy."
The Fed is scheduled to meet next week, and odds are increasing that it will drop a key phrase in its statement that says there will be "considerable time" from the end of the Fed's bond purchase to the first rate hike. Investors could see that as an indication that rate hikes are coming sooner than expected.