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PIMCO on the Fed: $1.6 trillion worth of advice

Federal Reserve Bank Chair Janet Yellen holds a news conference following a meeting of the Federal Open Market Committee June 17, 2015 in Washington.
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Wednesday afternoon, investors will be listening closely to the Federal Reserve statement and press conference for any indication of when the central bank will hike its benchmark rate.

Leading into the meeting, Scott Mather, chief investment officer, U.S. core strategies, at PIMCO, the world's largest bond mutual fund, with $1.59 trillion in assets under management, expects the Fed to upgrade its assessment on the economy and labor markets today.

"We think they should and will move in September," Mather said.

Read MoreRising interest rates: What it means for you

"One could easily conclude the Fed is behind the curve already, given slow pace of movement with rapidly improving economy, labor market, and expected inflation likely to rise to Fed target over next few quarters."

As for the market reaction to the Fed decision, Mather sees more volatility ahead."Financial markets will get continue to get more volatile. Equities and credit could underperform for a while."

As for the bond markets, Mather thinks the "front end" of the U.S. bond market is still not priced fully for this outlook. "Expect yields to rise in front end to reflect a 'faster' Fed. Much of the rise in longer dated yields is behind us so unlikely they rise as fast. But a careful/underweight position to U.S. rates is warranted."

The Federal Open Market Committee concludes its two-day meeting Wednesday afternoon. The statement is expected at 2:00 p.m. ET and Fed Chair Janet Yellen is scheduled to hold a press conference at 2:30 p.m. ET

Read MoreHere's what happens to markets when Yellen speaks

How to prepare for a rate hike: Pimco CIO