The absence of pro-growth fiscal policies in the United States may actually help the Federal Reserve raise interest rates in an orderly fashion, the chief investment officer at Haverford Trust said Wednesday.
"The key to successful unwinding of this monetary experiment, if you will, relies on better fiscal policy, more pro-growth fiscal policy, and I don't see that happening for a couple years," Hank Smith said on CNBC's "Squawk Box."
However, that doesn't mean the Fed's anticipated rate hike will be messy, Smith said. Without better fiscal policy, the U.S. economy is unlikely to accelerate suddenly, he said, making it easier for the Fed to manage a slow pace of incremental rate increases.
"I don't think there's a need to raise rates very quickly unless inflation gets out of hand—we don't expect that—or unless you see a dramatic pickup in GDP, and that's unlikely, too," he said "We're in this so-called 2, 2½ percent recovery. I don't see that changing too much until you get better fiscal policy."
Smith made his comments ahead of a decision Wednesday by the central bank's Federal Open Market Committee on interest rate levels. The Fed has kept its benchmark interest rates near zero since December 2008, and is widely expected to begin raising them this year or early next year.
In a CNBC survey, Wall Street respondents indicated they believe the Fed would hike rates twice this year and four times next year. Many see an initial rate hike in September, with another following in December.
UBS forecasts a gradual pace of rate hikes from the Fed, said the bank's deputy chief economist, Drew Matus. However, that strategy is at risk because the trend lines in economic data may force central bankers to hike more quickly than they would like, leading to increased market volatility.
Once inflation does pick up, the Fed must lean against it with rate hikes, Matus said.
"When unemployment falls, it tends to fall on a sustained basis. When wages go up, they tend to go up on a sustained basis," he said. "I think the Fed would like to go on a slow-and-steady basis, but I think the reason their pace looks the way it has in the past is because everything they target trends."
The order in which central banks around the world raise rates will also influence the Fed's pace, Matus said. The U.S. dollar has appreciated against the euro as the European Central Bank has bought billions in bonds as part of its quantitative easing stimulus program.
However, so long as monetary policy remains consistent around the world, with the U.S. raising rates first, investors should be prepared, he said.
"There's basically a pattern priced in the market of who's going and then who follows," he said. "As long as that doesn't switch, then the movement in the currency should actually be limited even though the rate hikes are there."
Ultimately, Matus said he expects the Fed to raise no sooner than September. With Wall Street essentially waiting for the first rate hike, August trading will be "as dead as dead can be," he said.