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Fed needs to do THIS before rate hike: El-Erian

Former Pimco co-CEO Mohamed El-Erian told CNBC on Wednesday he believes the Federal Reserve will drop the "considerable period of time" phrase, a reference to how long policymakers intend to keep rates low.

"You've got to remove the wording to move on rates in the middle of next year," El-Erian said on "Squawk Box" ahead of the the Fed's final policy statement of the year. "The Fed has tried to be transparent. It cannot leapfrog immediately to a rate hike."

El-Erian, chief economic advisor at Pimco-parent Allianz of Germany, predicted the Fed will start hiking rates in the middle of next year, as many on Wall Street are expecting.

Read MoreWhy the Fed will do nothing: Dennis Gartman

"There's the risk of low inflation but against that, the economy is growing more broadly and it's time to take some of the stimulus out of the market and allow the market to stand on its own feet," he said.

In addition to concerns about the Fed, investors have been increasingly worried about plunging oil prices and Russia's currency collapse.

"In the case of Russia, this is a classic emerging market crisis. It feeds on itself. It's going to lead to recession, inflation, capital flight, and the risk of further financial instability. But it's not 1998," when a currency crisis caused Russia to default on its debt, El-Erian said.

Read MoreForget oil, Russia—Fed is 'big elephant': Paulsen

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