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Fed wallowing in uncertainty, credibility hurt, said Pimco's Clarida

The last few months of Federal Reserve action — or inaction — has set back the credibility of the central bank, Pimco global strategic advisor Rich Clarida said Wednesday.

The minutes of the Federal Open Market Committee's July meeting, released Wednesday, showed that some voting members expect an interest rate hike will be needed soon. However, there was general agreement that more data is needed before such a move.

"They seem to be wallowing in uncertainty," Clarida said in an interview with CNBC's "Power Lunch."

U.S. stocks traded mostly flat following the release of the minutes. The U.S. dollar moved lower after initially popping, and the yield on the 10-year Treasury also moved lower, both indicative that the market doesn't believe the Fed will move.

"The way that they can regain credibility is really just acting, is just raising rates and until then we'll have some question marks, whether it's in the dollar or yield," global market strategist for JPMorgan Funds Gabriela Santos told "Power Lunch."

"This is a Fed with 17 participants and I would say 17 different opinions, and right now the chair has not really imposed her will," Clarida added. "Right now it's every man or woman for himself, and that's why the markets are confused."

On Tuesday, New York Fed President William Dudley said a rate hike could come in September.

However, St. Louis Federal Reserve president James Bullard is sticking with his view that a single move is all that's needed for a long time to come. On Wednesday, he said there was no reason yet to conclude the U.S. has shifted from the low-growth, low-inflation "regime" that makes low rates appropriate for what he has termed the "foreseeable future," perhaps two and a half years.

Now all eyes are on Janet Yellen and what she may say at the Federal Reserve's conference in Jackson Hole later this month, said Danielle DiMartino Booth, president of Money Strong and a former advisor to the Dallas Fed.

"I think there is a tremendous amount of dissention on the Federal Open Market Committee these days," she told "Power Lunch."

She thinks if the Fed acts according to its latest script, it will likely have the markets on "tenterhooks" for a September hike but actually won't deliver until December, after the election.

"On the inside, we're told to say it doesn't matter, but the election has a huge bearing on Fed action. I don't think they'll raise ahead of this election," she said. "They want to portray themselves as being apolitical, but I consider the Fed to be anything but apolitical."

And if the markets get rocky after the election, the Fed will not move in December, she added.

"It has been years and years and years, and they have always found an excuse to not move," Booth said.

— CNBC's Fred Imbert and Reuters contributed to this report.