Gartman: Strong dollar is only thing that will slow Fed

The "inordinate strength" of the U.S. dollar is the only thing that will keep the Federal Reserve from further tightening further once it raises interest rates, closely followed analyst Dennis Gartman said Monday.

"The Fed is very concerned about the strengthening of the U.S. dollar. I don't think they're going to be able to stop the strengthening of the U.S. dollar," the publisher of the "Gartman Letter" told CNBC's "Squawk Box."

After the Fed's initial raise, he said, the strong dollar is "the only thing that will keep the Fed from tightening in the near future."

Higher interest rates typically lead to a stronger dollar as investors buy the greenback to purchase U.S. debt.

The CME FedWatch tool—which tracks market reaction on potential changes to the fed funds target rate—showed a 54 percent likelihood of a rate hike in September. The Fed has kept its benchmark fed funds rate near zero since December 2008.

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Gartman said sideways or negative movement in the adjusted monetary base during the last 16 months indicates that the Fed has already begun the process of tightening.

The St. Louis Fed's adjusted monetary base is the sum of currency in circulation outside the Federal Reserve Bank and the U.S. Treasury, plus deposits held at the Fed.

The base should always be growing by 3.5 to 4 percent per year, Gartman said. That is important because the monetary base is "the stock from which the other soup of monetary aggregates is derived."

"When they begin the process of taking the overnight Fed funds rate up is really to me inconsequential," he said. "It's going to go up soon. Then the real question becomes, how quickly thereafter do they move it by another 50 basis points?"

Clarification: This version clarified an earlier headline. Gartman said the strong dollar would deter the Fed from further tightening once it initially raises interest rates.

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