Federal Reserve

Hatzius: Rate hike (still) coming September 2015

Fed on 'hawkish' side: Hatzius

After the Fed surprised Wall Street with a somewhat hawkish statement at the conclusion of its two-day meeting, pros were wondering just when Janet Yellen and company will move to raise rates.

One of the most followed economists on the Street, Jan Hatzius of Goldman Sachs said Wednesday on CNBC's "Closing Bell" that despite the Fed's more aggressive wording, he's sticking with an earlier forecast calling for a September 2015 rate hike.

Jan Hatzius
Jonathan Fickies | Bloomberg | Getty Images

After sifting through the statement, Hatzius said that he thought the Fed was telegraphing that it's "steady as she goes."

"I think they're basically saying things haven't changed that much," Hatzius said. "Largely they still have the same view on growth."

There was, however, some language that Hatzius said may be overly optimistic.

The Fed said "a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing."

"I still think there is a significant underutilization of labor resources out there. I wouldn't agree 100 percent with the Fed statement on that. I do think broader measures of labor market slack say we're pretty far away from normal," he said.

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However, ultimately Hatzius believes the economy will grow at a slow but steady pace. "My baseline expectation is that we'll see continued improvement; roughly on the same path we've been on since the middle of 2013."

Therefore, he expects a rate hike in September.

And when a rate hike comes, Hatzius added, as things stand now, "I would expect an increase of 25 basis points; I think we go from the current fed funds rate of zero to 0.25 to 0.25 to 0.50. But we have to get closer."