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Caterpillar CEO: Economy not pushing Fed to hike

If the Federal Reserve were to increase interest rates by a quarter of a percentage point Thursday, the worst-case-scenarios won't materialize, said the leaders of two U.S. companies with a combined stock market value of about $124 billion.

"All this speculation and drama around for 25 basis points, we're not going to see," Caterpillar Chairman and Chief Executive Doug Oberhelman told CNBC's "Squawk Box" hours before the Fed's decision on whether to hike the cost of borrowing money for the first time since June 29, 2006.

But at the same time, he doesn't believe the central bank should move yet. "I don't know how we get out of zero [percent] interest rates. The economy is not overly strong. I wish we had the economy pushing us for higher interest rates. We don't."

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Honeywell Chairman and CEO David Cote agreed with Oberhelman about a 25 basis point move in rates not being a big deal.

"If you said it's a quarter point on the way to 4, quarter point raises that's one thing," he said—stressing, as many economists have in recent days, the trajectory over time for rates may be more important than the exact timing of liftoff.

"Typically we raise interest rates when things are boiling. They're not boiling," Oberhelman said. "We [also] have a global economy that's slower than it's been in a quite a few years."

Cooling growth in China has been the main driver for concern about future economic conditions around the world.

"Look at their currency intervention, their stock market intervention, the growth rate decline, the need to shift their economy, all those things are true," Cote said.

Fed policymakers have the difficult job of forecasting whether the recovering U.S. economy and job market would see a drag on China's slowdown.

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"I'm not one to think that China is going to implode and suck the rest of the world down," Oberhelman said.

"[While] China has been slowing down for five years … it's still the largest construction equipment market in the world," he said. "We are doing all we can internally to fortify our company. It's about that simple. This is not the first rodeo on a slowdown in a cycle we've been through. I've been through a half a dozen of these."

Cote also expressed optimism on China. "If I take a long term view, do I believe they work their way through it, do I believe we need to be there and become a part of the fabric of the country? Absolutely."

"I say this to all our businesses," the Honeywell chief continued, "their next big global competitor is more likely to come from China than any place else in the world."

"We've got to be there," Oberhelman said. "We've got to play and win over there."

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