Fed won't hike rates in early 2015: Pimco's Crescenzi

Fed's Bullard says Fed should start rate hikes Q1 2015

St. Louis Federal Reserve Bank President James Bullard said Friday that the Fed will need to raise interest rates by the end of the first quarter of 2015. However, Pimco's Tony Crescenzi doesn't see that happening so soon.

"Don't expect a rate hike in the first quarter of next year," he told CNBC's "Street Signs."

That's because the central bank has said there would be "considerable time" between the end of asset purchases, presumed to be around the end of the year, and the first rate hike.

By raising rates so soon, "the Fed would be going back on its promise and upset markets," Crescenzi said.

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He believes a rate hike will likely occur mid to late 2015.

Bullard's comments came during a banking conference Friday, where he also told attendees that the economy is expected to grow at a "robust" pace for the rest of the year. Bullard doesn't currently vote on the central bank's rate-setting committee.

Pimco's Crescenzi said what's important is the amount of the rate hike, which is part of the firm's "new neutral" thesis.

Instead of the 5 percent or higher rates seen in the past three rate hike cycles, Pimco thinks the Fed will raise the rate to around 2 percent.

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"Markets can be more stable as a result," Crescenzi said.

Pimco's report, released earlier this week, said slow credit growth, demographic influences and the high levels of national indebtedness will keep the U.S. economy in "new normal" territory over the next 3 to 5 years. The firm coined the "new normal" term in 2009 to describe the slow-growth economy in the post-financial crisis world.

However, that "new neutral" doesn't mean Crescenzi is bearish on the stock market. In fact, he'd buy the dips.

"Higher P/Es, tighter credit spreads [and] lower yields can be sustained because the market's priced for 4 percent on the funds rate going forward ... but we think it'll ultimately be 2-ish."

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By CNBC's Michelle Fox. Reuters contributed to this story.