Federal Reserve

Mohamed El-Erian is right: The Fed is about to hike, economists say

Is the Fed signaling a hike?
VIDEO5:4005:40
Is the Fed signaling a hike?
September hike still on the table?
VIDEO3:2903:29
September hike still on the table?
What will September bring for the markets?
VIDEO2:4402:44
What will September bring for the markets?

Some economists are siding with Allianz's Mohamed El-Erian, who on Tuesday said he sees an 80 percent chance the Federal Reserve raises interest rates in September if Friday's jobs report comes in strong.

"I think he makes a good point. I think the Fed is actually pretty dovish, but they're data-dependent and they want to keep their credibility," Randy Anderson, chief economist at Griffin Capital, told CNBC's "Squawk Box" on Wednesday.

The Fed has signaled it will raise rates at least once this year, after backing off earlier expectations for four increases. The central bank has not moved since December, when it lifted its benchmark Fed funds rate by a quarter of a percent from near zero.

Anderson said he believes the Fed would prefer to wait until its December meeting, but policymakers don't want to risk missing their window to raise rates in 2016. That could happen if they hold off in September and are then delayed by some exogenous event like Britain's surprise vote in June to leave the European Union, he said.

A third consecutive month of employment gains in excess of 200,000 positions could provide an excuse to move, according to Anderson.

Closely watched investor and Omega Advisors CEO and Chairman Leon Cooperman echoed that view during an interview on CNBC's "Fast Money: Halftime Report" on Wednesday.

"If the employment report comes in at, say, 200,000 or more, they'll go for sure in September. If it comes in 150,000 or less, they'll probably wait until December," he said.

ADP and Moody's Analytics on Wednesday reported private employers added 177,000 jobs in August, though most of the gains were in services and manufacturing employment fell.

The market puts the probability of a rate hike at the Federal Open Market Committee's September meeting at 27 percent, according to the CME's FedWatch tool. The odds increased after Fed chair Janet Yellen said the case for raising rates had strengthened during an annual retreat in Jackson Hole.

Barclays Chief U.S. Economist Michael Gapen said Wednesday a September hike has always been on the table. The Fed kept rates unchanged in June following a disappointing April jobs report and dismal May data, but labor markets rebounded in June and July.

"If the April-May data was a fluke, I thought they'd be right back looking at a September hike," Gapen told "Squawk Box." "If you get a good number, I think they'll go."

Chicago Fed President Charles Evans this morning said the U.S. economy appears to be permanently slowing down, making it a bad time to raise rates. But Gapen said Evans is in the minority of policymakers who do not want to move until inflation reaches the Fed's 2 percent target.

"I think Yellen's comments at Jackson Hole were pretty clear. Labor markets send a signal, we'll move on a forecast of inflation," he said.