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Why the Fed has no choice on rates: Jack Welch

The Federal Reserve has to raise interest rates Wednesday for the first time in 9½ years because policymakers have painted themselves into a corner by not moving at the September meeting, said Jack Welch, management expert and former General Electric chief.

"It would have been better to go last time actually. Conditions were better," he told CNBC's "Squawk Box," referring to the widely expected hike that never materialized three months ago. "The economy is not any stronger. The commodities have gone further down."

The Fed also met in October, but few analysts had expected a rate hike then.

Read MoreInterest rate hike coming? What you need to know

"Oil spills into everything," Welch said, disputing the idea that cheaper energy helps consumers and corporations.

"People aren't spending" the money they're saving in lower gas prices, he added. "A big trucking company ... gets a real break. An airline gets a break," but for the most part, he contended, companies are not saving much money.

Oil prices were lower in early trading Wednesday, after a volatile session Tuesday that saw U.S. crude settle up nearly 3 percent after an almost 2 percent gain Monday. But oil lost nearly 11 percent last week, the biggest weekly downturn in a year.

Welch also said he's concerned about the stronger dollar against the Chinese yuan and the recent meltdown in junk bonds.

The iShares iBoxx $ High Yield Corporate high-yield ETF, which fell sharply Friday and Monday, recovered some ground Tuesday. But it was off 10.5 percent for the year, ahead of Wednesday's trading.

"Things are not that great," Welch said, "and the economy is not booming by any means."

Reminding viewers that he "surrendered" on the notion that the Fed should wait to raise rates the last time he was on "Squawk Box," he reiterated a "quarter point [hike] is not going to kill anybody."

Through years of easy monetary policies since the financial crisis, including rounds of quantitative easing and near zero interest rates since December 2008, Welch said: "There were lots of excesses."

Companies added what turned out to be too much capacity in a low economic growth environment, he added. "There's a huge global demand problem."

Those are the reasons there's been such a wave in mergers and acquisitions, Welch said. "People are trying to keep cutting costs. That's the only way they're getting EPS [earnings per share] up."

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