In preparing the market for a summer interest rate hike, the Federal Reserve is actually girding itself for an economic downturn, Forester Value Fund Portfolio Manager Tom Forester, said Wednesday.
Expectations for a move in June or July have ticked up after minutes from the Fed's April meeting showed policymakers are likely to raise rates in June if the economy improves in the second quarter, labor market conditions improve and inflation remains on track to hit the central bank's 2 percent target.
"We actually think the Fed is really just trying to get ammo for the next recession," Forester told CNBC's "Squawk Box."
The Fed had much more room to cut rates during the recessions that followed the dotcom bubble and 2008 financial crisis because the Fed funds rate was significantly higher, he noted.
"Right now, they're what? Twenty-five, 50 basis points? I mean, you've got no room right now if you do start heading into a recession," he said.
Forester, perhaps best known as one of the only fund managers to eke out positive returns in 2008, said current economic data are mixed. Tuesday's new home sales data were strong, but leading indicators like inventories to sales are "awful," and auto inventory to sales are "back at recession levels," he said.
Forester also believes China remains at risk of a hard landing, as exports and imports are currently contributing little to growth.
"China did a trillion dollars of new lending in the first quarter, and that got everybody excited and bumped back up. The dollar went down, so emerging markets did a lot better. But now all that stuff is sort of starting to come off again," he said.
At home, he flagged poor retail store earnings as cause for concern, as well.
"We actually think the market could get soft over the next few months," he said.