Cashin: Others doing Fed's tightening for it

Monetary policy in the U.S. will be tighter even if the Federal Reserve does not raise interest rates this year, Art Cashin of UBS said Monday.

"I have said again and again: I don't think the Fed tightens anymore, but I think the other central banks are, in effect, tightening for them by bringing their rates down and raising the contrast with the U.S. rates, and therefore the U.S. dollar," the firm's director of floor operations at the New York Stock Exchange told CNBC's "Squawk on the Street."

Japan's central bank surprised investors around the world Friday by introducing negative interest rates for the first time ever. The Bank of Japan also left its government bonds and exchange-traded funds purchase program unchanged.

The odds of the Fed raising rates further in 2016 have declined significantly amid weak U.S. economic data. On Friday, the Commerce Department said the economy grew at an anemic 0.7 percent annualized rate in the previous quarter.

The January ISM manufacturing index reading showed the sector contracted for the third straight month, while construction spending barely rose in December, according to data released Monday.

"On the construction number, it could turn out that the Q4 [GDP] number could be now closer to zero, because the construction numbers were not used in last Friday's report. So, the backdrop is pretty lousy," Joseph LaVorgna, chief U.S. economist at Deutsche Bank, said in another "Squawk on the Street" interview.

Traders Monday were betting the first 2016 Fed rate hike will come in September, according to the CME Group's FedWatch tool.

U.S. equities kicked off February trading lower, with the Dow Jones industrial average falling more than 80 points, while the S&P 500 and Nasdaq composite were down modestly.

"We're behind the eight ball. Oil's back at center stage," Cashin said. "Certainly, the central banks [and] the oil rigs are what's running the market today."

U.S. crude futures fell more than 6 percent Monday.

The decline in oil and stocks and mediocre U.S. data have spurred concerns about the possibilities of a global economic recession, but Russell Investments' chief market strategist, Stephen Wood, said Monday "We don't see a recession as our base-case scenario in 2016, but we really don't see strong growth either."

"I think the initial stage of quantitative easing was asset-price inflation, or stabilization, depending on the way you look at it, and that's been by and large achieved. Now we're in the tougher yards," he told "Squawk on the Street."

Deutsche Bank's LaVorgna also said that, in the event of a recession, the Fed would try to "do more QE and/or negative interest rates," but that these measures would not be effective.

"For there to be growth, there have got to be incentives and structural changes. Monetary policy reached its practical limitations a long time ago, which is when I would've argued the Fed should have started normalizing. You don't start normalizing this late into a business cycle," he said.