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Cat CEO's appeal to the Fed: Don't hike rates soon

Caterpillar Chairman and CEO Doug Oberhelman told CNBC on Tuesday the Federal Reserve should put off raising interest rates given the "fragile economy" and the impact of lower oil prices on the already-tepid inflation picture.

"I encourage the Fed not to raise interest rates sooner than they have to because the underlying foundation is not that strong yet," Oberhelman said on "Squawk Box" after the construction and mining equipment giant issued earnings well below expectations.

Read MoreCaterpillar CEO: Lower oil hits earnings, outlook

Many economists have been expecting the Fed to start increasing rates from their near-zero levels in the second half of the year.

"None of us sitting here six months ago would have ever guessed $45 oil," Oberhelman said, pointing to the collapse in crude price this year as a major headwind in the current quarter at Caterpillar and in the year ahead.

Outside the oil producing states, the U.S. economy is doing "OK but not booming," the Cat boss added. "We need something more than 3 percent in the U.S. to really grow, create jobs, and grow our top line. I'm not sure we're going to see that in 2015."

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Oberhelman did provide a caveat, acknowledging growth could pick up later in the year if the benefits of lower oil and gasoline prices for consumers work their way into the economy.

As for global growth, Oberhelman said, "We're only forecasting world GDP growth to be up 0.2 of a point to about 2.7 [percent] in 2015. That's not enough to create jobs. That's not enough to drive our top line. And it's a pretty weak economy overall."

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He characterized the European Central Bank's announcement last week of a $1.2 trillion bond purchase program as overdue but a "slight net positive."

"They've got to do something to revive Europe," he continued. "It's going to take a while to dig out of that hole."

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