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Expected rate hike could start a 'nose to nose' between Trump and the Fed: Art Cashin

The Federal Reserve's expected rate hike Wednesday could solicit a response from Donald Trump, worrying investors and heightening tensions between the president-elect and the central bank, Art Cashin told CNBC on Wednesday.

Cashin, UBS' director of floor operations at the New York Stock Exchange, said he was nervous Trump would continue his criticism of the Fed for being too politically motivated after the anticipated hike.

"If he says, 'See, I told you they were political all along. Now that I'm in, they're raising rates,' that could set up for a little bit of a nose-to-nose between the president and the Fed," Cashin told "Squawk on the Street."

"It would hint that the pre-election signs of hostility with the Fed may be a bit more sincere than some people thought," he added, wondering whether Trump would repeat his call for Fed Chair Janet Yellen's resignation. Her four-year term ends in 2018.

CNBC's Carl Quintanilla reported Cashin's concerns in two tweets.

As the Fed is one of the only major central banks raising rates right now, Cashin said he believed a hike would hurt its ability to raise rates again in 2017.

He said that some of Trump's proposed policies, like slowing imports and boosting American manufacturing and exports, would actually benefit from keeping rates relatively low for the time being.

"Even though he might have talked up interest rates before, [it's] in his best interests keeping rates down and limiting imports," Cashin said. "[Then] maybe we bring back those jobs he talked about."