Futures Now

Chase: Hike or not, this is most important for Fed

Biggest takeaway from Fed will be language: Economist

The big question on every investors mind this week is simple: Will she, or won't she?

Wall Street is ripe with anticipation as the countdown continues to what could be the most important Federal Reserve statement since the financial crisis. But while everyone seems to be weighing in on how the market will react if Fed Chair Janet Yellen decides to hike or not, one widely followed economist says it all comes down to her language.

"It really depends on what kind of guidance we get," Anthony Chan told CNBC's "Futures Now" on Tuesday. Chan, who is in the camp of a December rate hike, believes that if the Fed does indeed pass on September, it must make a "strong case" that the "fundamentals are improving and the only reason they decided to stop or pause is because of global volatility and some volatility here in the U.S.," in order for the market to react positively.

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The S&P 500 and have been plagued with heightened volatility as we headed into this week's Fed meeting. Each index has fallen 5 percent in the past month. For Chan, that extreme volatility coupled with uncertainty in the Chinese economy is enough reason to push a hike back to December, when things "settle down a bit."

If the Fed were to announce a September rate hike on Thursday, Chan noted that Yellen could run the risk of losing credibility. "We know that other central banks in the past have moved and had to reverse themselves and I think you lose some sort of credibility when you have that sort of behavior,"said Chan, chief economist JPMorgan Chase's private client group. "I'd feel more comfortable if the Federal Reserve when there was no doubt in anyone's mind that it was the right thing to do and the risk of them having to reverse course was minimal."

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Futures for the NYSE and S&P 500 were flat Wednesday, a day after gaining more than 1 percent ahead of the two-day meeting.