Art Cashin: This has to keep central banks up at night

Cashin: Why commodities are weak

The decline in commodity prices comes with "at least nominally deflationary moves," and that has to be tremendously frustrating to the central banks, veteran trader Art Cashin said Friday.

"They're shoveling money at the markets like crazy and prices are not only not going up, in many cases they're going down. That's got to keep them awake at night," Cashin, director of floor operations at UBS, said in an interview with "Power Lunch."

oil fell below $98 a barrel on Friday on concerns over weak demand and plentiful supplies. U.S. crude was also down after closing up the previous session.

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Art Cashin
Adam Jeffery | CNBC

A strong U.S. dollar has also contributed to falling commodity prices, and Cashin noted that if the dollar stabilizes, those prices could get "closer to stabilization."

However, "there are some benefits in seeing these low prices. It's a tax cut for the driver and people are getting a little bit of a break. And on a geopolitical level it's a poke in the eye for [Russian President Vladimir] Putin because he depends on higher oil prices," he said.

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Looking ahead to next week's Federal Reserve meeting, Cashin called it "very important." Many are expecting the central bank to drop the phrase that says there will be "considerable time" from the end of its bond-buying program to the first rate hike.

"I would love to hear what the tone is. I want to hear the speakers that come out after it and how they put their positions out," Cashin said.

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—By CNBC's Michelle Fox. Reuters contributed to this report.