The Federal Reserve should increase interest rates now as a defensive move against a possible world economic drag next year, market watcher David Darst said Wednesday ahead of the start of the central bank's crucial two-day meeting.
"If you are going to have a global slowdown, build some powder now that you could then drop then drop rates," the senior advisor at Morgan Stanley Wealth Management told CNBC's " Squawk Box ."
"I find it troubling when the Fed has moved from being data dependent to being market dependent."
The Fed begins its two-day meeting Wednesday to decide whether to hike borrowing costs for the first time in nine years. It issues a policy statement at 2 p.m. EDT Thursday, along with economic projections, followed by a news conference by central bank chief Janet Yellen at 2:30 p.m. EDT.
The CME FedWatch tool—which tracks daily market reaction on potential changes to the fed funds target rate—puts the probability of a rate hike this week at 25 percent, with the chances increasing in the coming months.
With jobs being half of the Fed's dual-mandate, Darst pointed to the latest job openings and labor turnover survey (JOLTS), which showed job openings climbing to 5.75 million in July—better than expected and the highest since the series began in December 2000.
The JOLTS numbers have been cited by Yellen as one of her favorite indicators of labor market strength.
Darst did say that Yellen's "hibernation" is making it hard to telegraph what central bankers plan to do this week. "[Yellen] not speaking for 63 days, that extends to the period of (the) August 11 devaluation of the Chinese [currency], indicating things were maybe more uncertain."
The concerns about China's growth are seen as a complicating factor of the Fed, which needs to gauge whether a slowdown in the world's second-largest economy will spill over into the U.S. economy, which has been pretty good lately.
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